The effect of heterogeneous beliefs on mergers and acquisitions. Issue 8 (4th May 2017)

• Record Type: Journal Article
• Authors: Deng, Lu; Li, Sifei; Liao, Mingqing
• Is Part Of: Applied economics letters. Volume 24:Issue 8(2017)
• Page Start: 559
• Page End: 562
• Publication Date: 2017-05-04
• Subjects: Heterogeneous beliefs -- mergers and acquisitions -- state ownership -- China; G32 -- G34; Economics -- Periodicals; Economics, Mathematical -- Periodicals; 330
• DOI: 10.1080/13504851.2016.1210762
• Languages: English
• ISSNs: 1350-4851

Abstract

ABSTRACT: This article investigates the effect of heterogeneous beliefs on firms' mergers and acquisitions (M&A) decisions. Using data of China's financial market, which is featured with great heterogeneity of belief, we find that heterogeneous beliefs are positively associated with the occurrence of M&A transactions, and firms with greater heterogeneous beliefs are more likely to pay the transactions with stock. Moreover, we show that government intervention, measured by state ownership, weakens the effect of heterogeneous beliefs on firms' M&A decisions.