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Do Stock-Financed Acquisitions Destroy Value? New Methods and Evidence

Petmezas, D, Golubov, A and Travlos, N (2015) Do Stock-Financed Acquisitions Destroy Value? New Methods and Evidence Review of Finance.

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Abstract

We contribute to the debate on whether stock-financed acquisitions destroy value for shareholders. A stock-financed acquisition is a joint takeover/equity-issue event. Using seasoned equity offering announcement returns, we estimate through linear prediction and propensity-score matching the share price drop that stock acquirers experience due to the financing choice. Net of this effect, stock-financed acquisitions are not value destructive, and the method of payment generally has no further explanatory power in the cross-section of acquirer returns. Our evidence is largely inconsistent with the agency costs of overvalued equity hypothesis.

Item Type: Article
Authors :
NameEmailORCID
Petmezas, Dd.petmezas@surrey.ac.ukUNSPECIFIED
Golubov, AUNSPECIFIEDUNSPECIFIED
Travlos, NUNSPECIFIEDUNSPECIFIED
Date : 11 April 2015
Identification Number : https://doi.org/10.1093/rof/rfv009
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:36
Last Modified : 17 May 2017 14:37
URI: http://epubs.surrey.ac.uk/id/eprint/820736

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