Stock Liquidity, Mergers, and Valuation

An Yan

<span lang="EN-US" style="font-family: Calibri; font-size: 10.5pt; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: 宋体; mso-bidi-font-family: 'Times New Roman'; mso-font-kerning: 1.0pt; mso-fareast-language: ZH-CN; mso-ansi-language: EN-US; mso-bidi-language: AR-SA">In the paper, we study the relation between stock liquidity and firm value in relation to the mergers and acquisitions. We find that a firm&rsquo;s value on average is positively related to its stock liquidity. However, the positive relation becomes less pronounced when the firm has a higher likelihood of being a bidder. A firm&rsquo;s value could even be negatively related to stock liquidity when the firm has a sufficiently high likelihood of being a bidder. We also find that once a liquid firm does become a bidder, investors react negatively upon the takeover announcement. These results suggest that there could exist a dark side of stock liquidity on firm value in relation to the firm&rsquo;s takeover activities. Finally, we study the monitoring explanation and the overinvestment-based agency cost explanation on this dark side of stock liquidity.</span>

16:30-18:00, Monday, May 19, 2014

Room N303 Economic Building

English

WISE

系列讲座

<div style="text-justify: inter-ideograph"><a name="OLE_LINK1">Professor of Finance </a>,<span>Schools of Business </span>,<span>Fordham University </span></div>