Constructing perceptions of value: Corporate acquisitions in the communications industries, 1997--2002.

摘要

The origin of market value has not been sufficiently explored in the social sciences. While there is a tendency among economists and sociologists to see value as imported to the market from external sources (e.g. culture, internal preferences), I argue that shifts in market value are often endogenous to the market setting. Perceptions of value, or collective beliefs that specific sets of assets will yield benefits for the owner, are most malleable when markets are unstable. Instability is caused by intense competition and rapid technological change, both of which upset firms' abilities to make consistent profits and retain their market position. Instability amplifies general uncertainty about the best ways to create value.Perceptions of value emerge in unstable markets as firms monitor and mimic their peers, who act as information proxies about the future value of assets. I look at acquisitions within the communications industries from 1997 to 2002 to assess this claim. I expect that firms acquire target assets in the same segments as their closest competitors and market leaders. Unstable market conditions amplify the extent to which firms use their peers to guide their acquisition choices. The collective flow of acquisitions caused by this mimicry creates perceptions of value that become reflected in concrete, standard measures of market value. Investors and other third-party observers use peer behavior as an interpretive frame for estimating value creation. They assume the collective acquisitions are social proof that value is being created and this is reflected in their investment behavior, which in turn drives up the stock prices of acquiring firms.Regression findings support these propositions although there is weak evidence that market value gains from peer mimicry are long-term. Instead, I find that using peers to frame acquisition value tends to lead to initial overvaluation, which is subsequently corrected through a long-term value discount. I suggest that unstable market conditions tend to lead to speculative behavior and inefficient market pricing.