Limited investor attention allows overvalued companies to engage in stock-financed acquisitions of listed target firms without experiencing significant reductions in existing valuations. Our robust findings show that overvalued stock-paying acquirers that are subject to limited investor...

The purpose of this study is to develop a valuation framework for mergers and acquisitions by explicitly incorporating the synergy effect of mergers. Based on the real options approach, we introduce the upper and lower bounds of terms for an acquirer that makes a merger profitable to both the...

Behavioral theories suggest that overconfident investors overestimate the quality of their information and underestimate risk. They have a high demand for risky assets and require a lower risk premium, causing asset prices to rise and leading to overvaluation. We investigate how overconfidence...