Assortative matching in merging firms’ stock price informativeness
Document Type
Article
Publication Title
Applied Economics
ISSN
0003-6846
DOI
10.1080/00036846.2022.2128177
Publication Date
1-1-2022
Abstract
Developed upon the assortative matching theory and recent studies that merging firms are matched on diverse firm characteristics and policies, this paper examines whether they also match in stock price informativeness. Our study shows that assortative matching between the acquirer and target firms’ stock price informativeness increases the probability of deal initiation. It also increases the likelihood that an M&A transaction is paid with stock and constructed as a negotiated merger. Finally, matched stock price informativeness increases merger wealth effect. This paper expands the application of the assortative matching theory in M&A literature from the perspective that stock price firm-specific information reflects firm fundamentals and policies.
Recommended Citation
Ouyang, W.,
Szewczyk, S. H.,
&
Ngo, T.
(2022).
Assortative matching in merging firms’ stock price informativeness.
Applied Economics, ,
DOI: 10.1080/00036846.2022.2128177
https://scholarlycommons.pacific.edu/esob-facarticles/341