Are small firms less vulnerable to overpriced stock offers?

Anand M. Vijh and Ke Yang

Journal of Financial Economics, 2013, vol. 110, issue 1, 61-86

Abstract: We show an inverted-U relation between targetiveness (probability of being targeted) and firm size. However, this pattern describes stock offers and is more pronounced during hot markets characterized by higher stock valuations. For cash offers we find a negative and monotonic relation. These contrasting patterns suggest that small firms (in the bottom NYSE size quartile) are less vulnerable to overpriced stock offers. In addition, we find that the stock acquirers of small targets are less overvalued than those of large targets, and that the announcement returns are less negative for stock acquirers of small targets than for those of large targets.

Keywords: Firm size effect; Mergers and acquisitions; Overvaluation; Opinion divergence; Equity issuance (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:110:y:2013:i:1:p:61-86

DOI: 10.1016/j.jfineco.2013.05.003

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