The Impact of Merger and Acquisition Firms on Stock Market Bubble

Abstract

In this research, we have endeavored to ascertain how the Merger & Acquisition firms effect the Pakistani stock market (PSX) during all stages of bubble periods. The regression results of “transaction multiples” and “inverse transaction multiples” show that the trading of the securities of Merger & Acquisition firms has increased in all stages of bubble periods less crash period where they decreased. The regression results have also revealed that Pakistani investors in the stock market carry a “weak financial knowledge & financial risk distress management” & they prefer market manipulation for discounting & therefore, they are adversely hit market manipulations in the stock exchange while trading securities. Resultantly, managerial incentives, as well as cost of capital of Merger & Acquisition firms, stand increased with the help of relevance of accounting, Earnings manipulation & by exercise Investing Activities.