Acquisition finance and market timing |
| |
| Institution: | 1. INSEAD, Boulevard de Constance, 73305 Fontainebleau Cedex, France;2. London School of Economics, Houghton Street, WC2A 2AE London, United Kingdom;1. Department of Finance, Florida State University, Tallahassee, FL 32306-1110, United States;2. Department of Finance, Ming Chuan University, Taipei City, Taiwan;1. School of Business, University of Kansas, Lawrence, KS 66045, United States;2. College of Business & Economics, Towson University, Towson, MD 21252, United States;3. College of Business, Stony Brook University, Stony Brook, NY 11794, United States;1. Department of Finance, Deakin University, Melbourne, Australia;2. International Center for Financial Research, Jiangxi Normal University, China 99 Ziyang Road, Nanchang, Jiangxi 330022, China |
| |
| Abstract: | Bidders have an incentive to pay with stock when their shares are overvalued, but target firms should be reluctant to accept such overvalued payment. In a sample of 2978 acquisitions, we find that stock payment is readily accepted only when the bidder can justify the financing decision in terms of such economic fundamentals as optimal capital structure. Yet even when the fundamentals justify stock payment, paying with cash is common. In that way, firms can preclude paying with undervalued stock and are more likely to experience positive long-term excess returns. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
