TY - UNPB
T1 - Overvaluation, Bidder Returns, and the Method of Payment in Acquisitions: Evidence from Serial Acquirers
AU - Macias, Antonio J.
AU - Rau, P. Raghavendra
AU - Stouraitis, Aris
PY - 2012/3/15
Y1 - 2012/3/15
N2 - Serial acquirers conduct the vast majority of acquisitions in the U.S. Serial acquirers appear to strategically shift between methods of payment based on changes in their own characteristics, using overvalued stock in stock-financed acquisitions during short windows of opportunity. Acquirer overvaluation increases the speed to the next acquisition and the propensity to pay with stock. The market reacts positively to the initial stock-financed acquisitions by overvalued acquirers. As the overvaluation of stock acquirers declines while they complete more deals, they accelerate the speed to the next acquisition. Acquirers that pay with overvalued stock experience negative excess returns when the acquisition spree goes on too long.
AB - Serial acquirers conduct the vast majority of acquisitions in the U.S. Serial acquirers appear to strategically shift between methods of payment based on changes in their own characteristics, using overvalued stock in stock-financed acquisitions during short windows of opportunity. Acquirer overvaluation increases the speed to the next acquisition and the propensity to pay with stock. The market reacts positively to the initial stock-financed acquisitions by overvalued acquirers. As the overvaluation of stock acquirers declines while they complete more deals, they accelerate the speed to the next acquisition. Acquirers that pay with overvalued stock experience negative excess returns when the acquisition spree goes on too long.
U2 - 10.2139/ssrn.2022171
DO - 10.2139/ssrn.2022171
M3 - Working paper
T3 - S&P Global Market Intelligence Research Paper Series
BT - Overvaluation, Bidder Returns, and the Method of Payment in Acquisitions: Evidence from Serial Acquirers
PB - SSRN
ER -
