Market valuation and merger waves
Publication
, Journal Article
Rhodes-Kropf, M; Viswanathan, S
Published in: Journal of Finance
January 1, 2004
Does valuation affect mergers? Data suggest that periods of stock merger activity are correlated with high market valuations. The naïve explanation that overvalued bidders wish to use stock is incomplete because targets should not be eager to accept stock. However, we show that potential market value deviations from fundamental values on both sides of the transaction can rationally lead to a correlation between stock merger activity and market valuation. Merger waves and waves of cash and stock purchases can be rationally driven by periods of over- and undervaluation of the stock market. Thus, valuation fundamentally impacts mergers.
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Published In
Journal of Finance
DOI
ISSN
0022-1082
Publication Date
January 1, 2004
Volume
59
Issue
6
Start / End Page
2685 / 2718
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
Citation
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Chicago
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Rhodes-Kropf, M., & Viswanathan, S. (2004). Market valuation and merger waves. Journal of Finance, 59(6), 2685–2718. https://doi.org/10.1111/j.1540-6261.2004.00713.x
Rhodes-Kropf, M., and S. Viswanathan. “Market valuation and merger waves.” Journal of Finance 59, no. 6 (January 1, 2004): 2685–2718. https://doi.org/10.1111/j.1540-6261.2004.00713.x.
Rhodes-Kropf M, Viswanathan S. Market valuation and merger waves. Journal of Finance. 2004 Jan 1;59(6):2685–718.
Rhodes-Kropf, M., and S. Viswanathan. “Market valuation and merger waves.” Journal of Finance, vol. 59, no. 6, Jan. 2004, pp. 2685–718. Scopus, doi:10.1111/j.1540-6261.2004.00713.x.
Rhodes-Kropf M, Viswanathan S. Market valuation and merger waves. Journal of Finance. 2004 Jan 1;59(6):2685–2718.
Published In
Journal of Finance
DOI
ISSN
0022-1082
Publication Date
January 1, 2004
Volume
59
Issue
6
Start / End Page
2685 / 2718
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment