NBER Working Paper No. We present a model of mergers and acquisitions based on stock market misvaluations of the combining firms.

The key ingredients of the model are the relative valuations of the merging firms, the horizons of their respective managers, and the market's perception of the synergies from the combination.

The model explains who acquirers whom, whether the medium of payment is cash or stock, what are the valuation consequences of mergers, and why there are merger waves. The model is consistent with available empirical findings about characteristics and returns of merging firms, and yields new predictions as well.

Stock Market Driven Acquisitions

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Vishny NBER Working Paper No. Jovanovic and Rousseau w The Q-Theory of Mergers Healy, Palepu, and Rubak w Does Corporate Performance Improve After Mergers?

Myers and Majluf w Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have Holmstrom and Kaplan w Corporate Governance and Merger Activity in the U. Making Sense of the s and s Moeller, Schlingemann, and Stulz w Wealth Destruction on a Massive Scale? National Bureau of Economic Research, Massachusetts Ave.

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Stock Market Driven Acquisitions by Andrei Shleifer, Robert W. Vishny :: SSRN

Data Boston Census Research Data Center BRDC. He is also the Mitsui Professor of Economics at M. Denis Healy, Director of Development NBER Massachusetts Avenue Cambridge, MA ph: Making Sense of the s and s. A Study of Acquiring-Firm Returns in the Recent Merger Wave. Aging Asset Pricing Behavioral Finance Children Chinese Economy Cohort Studies Corporate Finance Economics of Crime Development Economics Development of the American Economy Economic Fluctuations and Growth Education Entrepreneurship Environment and Energy Financial Risks Health Care Health Economics Household Finance.

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