Extant studies often assume that targets' private ownership mitigates acquirers' incentives and opportunities to finance acquisitions with inflated stocks. This view stems from the observation that, although the average stock-for-stock acquirer's merger announcement abnormal return is negative...

We examine the expected economic benefits of mergers and acquisitions. We conclude that both signaling and revelation biases are responsible for the commonly reported finding that on average takeovers are harmful to bidder shareholder wealth. After accounting for these two biases that lead to a...

Do acquirors profit from acquisitions, or do acquiring CEOs overbid and destroy shareholder value? We present a novel approach to estimating the long-run abnormal returns to mergers exploiting detailed data on merger contests. In the sample of close bidding contests, we use the loser's...

This study examines the contradictory predictions regarding the association between the premium paid in acquisitions and deal size. We document a robust negative relation between offer premia and target size, indicating that acquirers tend to pay less for large firms, not more. We also find that...

This paper tests the effect of firms' mispricing and investment opportunities on the method of payment in mergers. Using a new proxy for investment opportunities and a sample of 1,187 mergers completed between 1990 and 2005 among US publicly traded firms, I find that acquirers lead the decision...

We examine the characteristics of the sixth merger wave that started in 2003 and came to an end approximately in late-2007. The drivers of this wave lie primarily in the availability of abundant liquidity, in line with neoclassical explanations of merger waves. Acquirers were less overvalued...

Material-Adverse-Change clauses (MACs) are present in virtually every acquisition agreement. These clauses are the outcome of extensive negotiation and exhibit substantial cross-sectional variation in the number and types of events that are excluded from being ‘material adverse events' (MAEs)....

Prior studies suggest that investors have limited attention. Tests of the inattention hypothesis have been performed in the context of relatively small corporate events, particularly earnings announcements. Presumably, large corporate events would always attract sufficient investor attention....