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2014/1 (Vol. 35)

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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.


  1. Theoretical literature
    1. Neoclassical hypotheses
      1. Economic disturbance
      2. Efficient reallocation
    2. Behavioral hypotheses
      1. Market timing
      2. Managerial overconfidence
  2. Model and empirical predictions
    1. Predictions on the determining factors of the volume of M&As
    2. Predictions on the determining factors of the payment method
  3. Data and measures
    1. Identification and description of M&A waves
    2. Measuring mispricing
    3. Measuring managerial overconfidence
    4. Measuring equity dependence
  4. Tests and findings
    1. Industry shocks
    2. Market timing and managerial overconfidence
      1. Model specification
      2. Empirical results
    3. Additional control variables
      1. Variables related to relative deal size and deal characteristics
      2. Variables related to share dilution
      3. Variables related to industry and bidder dynamics
      4. Variables related to information asymmetry
  5. Conclusion

To cite this article

Christophe Trowski, “ Acquisitions and Bidder Stock Valuations: Empirical Evidence from the French Market ”, Finance 1/2014 (Vol. 35) , p. 51-105
URL : www.cairn.info/revue-finance-2014-1-page-51.htm.

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