JEL classification: G34, G32
Key words: Mergers and acquisitions, Cash flow duration, Misvaluation
학회소식
[2022년 5차 CAFM2022]Cash Flow Duration and M&A Activity
작성자 : 관리자
조회수 : 1634
게시일 :
2022-12-20
Using a direct measure of equity cash flow duration, we find that firms with high cash flow duration are more likely to become an acquirer and use stock as the payment method. Both in the short and long run, stock markets react more unfavorably to acquisition announcements by these acquirers. Furthermore, the association between cash flow duration and merger activity is more pronounced during periods of high investor sentiment and for firms with weak external monitoring. These findings are consistent with the view that acquisitions are driven by stock market overvaluation of high-duration firms.
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