To read this content please select one of the options below:

$40.00 (excl. tax) 30 days to view and download

Price‐to‐earnings multiplies and mergers and acquisition

Lianzan Xu, Francis Cai

Competitiveness Review

ISSN: 1059-5422

Article publication date: 1 March 2006

37

Abstract

This paper examines the assertion that the financial market pays fixed PE multiples and that the recognition of goodwill and subsequent amortization depresses earnings and stock prices, putting U.S. firms in a competitive disadvantage in the international merger and acquisition arena. Evidence from this study suggests that, contrary to common belief, price/earnings ratio expands by a sufficient amount in response to amortization, making amortization irrelevant to stock valuation.

Keywords

Citation

Xu, L. and Cai, F. (2006), "Price‐to‐earnings multiplies and mergers and acquisition", Competitiveness Review, Vol. 16 No. 1, pp. 32-37. https://doi.org/10.1108/cr.2006.16.1.32

Publisher

:

Emerald Group Publishing Limited

Copyright © 2006, Emerald Group Publishing Limited

Related articles