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The impact of mispricing and growth opportunities on mergers and acquisitions of public companies from the behavioral theory of the firm

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  • Wei, Baiyang
  • Sun, Ye

Abstract

This paper examines the impact of the expectation gap of mispricing and growth opportunities on M&A motivation and performance from the perspective of the behavioral theory of the firm. The study proves that the expectation gap is a key factor that motivates firms to implement M&A decisions. When the expectation gap is negative, rational managers raise stock prices and improve the firm's operating conditions by implementing M&A. In addition, the firm's life cycle has a significant effect on the level of the expectation, while economic policy uncertainty weakens the effect of the expectation gap on M&A motivation and operating performance.

Suggested Citation

  • Wei, Baiyang & Sun, Ye, 2024. "The impact of mispricing and growth opportunities on mergers and acquisitions of public companies from the behavioral theory of the firm," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324003283
    DOI: 10.1016/j.frl.2024.105298
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