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

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.