Misvaluation and technological acquisitions: An empirical study and mechanism analysis

Jinwei Zhou, Qizheng Gao and Qi Luo

PLOS ONE, 2024, vol. 19, issue 11, 1-30

Abstract: This paper investigates the influence of industry-level overvaluation on technological acquisitions, utilizing merger and acquisition (M&A) data from Chinese listed firms spanning 2007 to 2022. Our analysis confirms that industry-level overvaluation promotes technological acquisitions, a finding that remains significant even after several robustness checks. Compared to acquirers with lower financial constraints, those with higher financial constraints rely more on industry-level overvaluation to drive technological acquisitions. Furthermore, the study indicates that technological acquisitions initiated by industry-level overvaluation tend to enhance the innovative output of the acquirer. By exploring the relationship between industry-level overvaluation and technological acquisitions, this research extends the literature on misvaluation-driven M&A. Additionally, this study provides new evidence and perspectives on the impact of capital markets on the real economy, and contributes to the healthy development of capital markets and M&A markets in emerging countries.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0313848

DOI: 10.1371/journal.pone.0313848

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