Misvaluation and UK mergers 1986-2002

Jerry Coakley, Lei Fu and Hardy Thomas

Applied Financial Economics, 2010, vol. 20, issue 3, 201-211

Abstract: We provide evidence that ex ante misvaluation matters for merger activities in the UK 1986-2002 using a sample of 302 bidders and targets. Sector or long-run misvaluation causes merger firms to be more overvalued than nonmerger firms. Acquirers are overvalued absolutely and relative to targets which are themselves absolutely undervalued. Bidders use mergers to purchase the superior long-term growth prospects of targets. Finally our probit regression results provide evidence that misvaluation drives merger waves in the UK.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09603100903282655 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apfiec:v:20:y:2010:i:3:p:201-211

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAFE20

DOI: 10.1080/09603100903282655

Access Statistics for this article

Applied Financial Economics is currently edited by Anita Phillips

More articles in Applied Financial Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().