Version 1
: Received: 23 February 2020 / Approved: 24 February 2020 / Online: 24 February 2020 (14:06:03 CET)
Version 2
: Received: 1 March 2020 / Approved: 3 March 2020 / Online: 3 March 2020 (11:02:16 CET)
How to cite:
Xiao, M.; Peng, Z. Stock Mispricing Differentiate the Motives for Mergers and Acquisitions：
Based on the Post-acquisition Market Evidence from China. Preprints2020, 2020020355. https://doi.org/10.20944/preprints202002.0355.v1
Xiao, M.; Peng, Z. Stock Mispricing Differentiate the Motives for Mergers and Acquisitions：
Based on the Post-acquisition Market Evidence from China. Preprints 2020, 2020020355. https://doi.org/10.20944/preprints202002.0355.v1
Xiao, M.; Peng, Z. Stock Mispricing Differentiate the Motives for Mergers and Acquisitions：
Based on the Post-acquisition Market Evidence from China. Preprints2020, 2020020355. https://doi.org/10.20944/preprints202002.0355.v1
APA Style
Xiao, M., & Peng, Z. (2020). Stock Mispricing Differentiate the Motives for Mergers and Acquisitions：
Based on the Post-acquisition Market Evidence from China. Preprints. https://doi.org/10.20944/preprints202002.0355.v1
Chicago/Turabian Style
Xiao, M. and Zhijia Peng. 2020 "Stock Mispricing Differentiate the Motives for Mergers and Acquisitions：
Based on the Post-acquisition Market Evidence from China" Preprints. https://doi.org/10.20944/preprints202002.0355.v1
Abstract
This study uses a recently developed theory and technique to examine post-acquisition evidence as to the motives for mergers and acquisitions(M&As), and decomposed the M/B ratio into three components: firm-specific error, time-series sector error, and long-run value-to-book. We make a multidimensional grouping according to the frequency of M&As , payment method, proportion of shares acquired, M/B ratio before the merger and total assets of the acquirers before the merge. The results confirm that M&As involve multiple motives, such as market timing, industry and economic shocks, agency and hubris. Using a sample of 2,035 M&As in China, we find that 59% are related to market timing, 68% are related to agency and hubris, 21% are related to industry and economic shocks, 51% are related to multiple motives.
Keywords
mispricing; motives for mergers and acquisitions; M/B ratio decompositon; LSTM networks
Subject
Business, Economics and Management, Accounting and Taxation
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
