Working Paper No. 1157

Misvaluation and Financial Constraints: Method of Payment and Buyer Identity in Mergers & Acquisitions

Published: March 15, 2017Pages: 32Keywords: Mergers and acquisitions; Investments; Asymmetric information; Stock misvaluation; Financial frictionsJEL-codes: D82; G32; G34

Misvaluation and Financial Constraints: Method of Payment and Buyer Identity in Mergers & Acquisitions Aron Berg


The paper studies how stock price misvaluation and financial frictions affect whether an acquisition occurs between or within industries and whether the acquirer pays in cash or stocks. I set up a model where stock market misvaluation correlates within industries and across industries and assume that managers have private information regarding their own firm and firms similar to it. The model yields predictions regarding which firm acquires which firm, and the method of payment used in transactions.

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

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In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

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