Acquisitions and Bidder Stock Valuations: Empirical Evidence from the French Market

Christophe Trowski ()
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Christophe Trowski: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper analyzes the influence of industry shocks, mispricing, and managerial overconfidence on merger and acquisition activities on the Euronext Paris stock market, between 1996 and 2010. Merger and acquisition waves are led by industry shocks, where the probability that the target's shareholders will be paid with stock increases with overpricing of the bidding firm's shares, and tends to decrease with overconfidence of its manager. It thus appears that behavioral predictions do not necessarily contradict the economic disturbance hypothesis. Quite to the contrary, the influence of managerial overconfidence on the method of payment seems to be sensitive to industry shocks.

Keywords: Mergers and acquisitions; Valuation; Behavioral finance; Finance comportementale; Valorisation; Fusions et acquisitions (search for similar items in EconPapers)
Date: 2014-03
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Published in Finance, 2014, 35 (1), pp.51-105

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00997724

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