Abstract
This study derives and tests a stock price determination model, and examines, using this model, the effect on the stock price of a continued merger policy. The findings indicate that this policy conveys additional information on the firm's risk-adjusted profitability over and above the information already reflected in the other determinants of the stock price such as dividends, earnings, operating risk and financial risk. The model derived and tested in this study seems useful in explaining the level of stock prices and the effect of a continued merger policy on the firm stock price.
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