Research shows that in times of high or increasing stock prices, due diligence is relaxed and firms often overpay for acquisitions and the long-run performance of the newly formed form suffers.

Question

Quizplus · Accepted Answer

This statement is supported by research and has been found to be true. During times of high or increasing stock prices, firms may become less cautious in their acquisition decisions and pay more than the target company is worth, leading to long-term underperformance for the newly formed company.

Research Shows That in Times of High or Increasing Stock