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The alchemy of acquisition currency: exclusive advantages of listed companies

Giulio Tagliavini (Economics Department, University of Parma, Parma, Italy)

Managerial Finance

ISSN: 0307-4358

Article publication date: 14 March 2008




Acquisition currency is the possibility, enjoyed mainly by listed companies, of paying for acquisitions with paper (i.e. with conversion shares) instead of financial means, decreasing the participating share of the controlling shareholder as little as possible. The paper seeks to address the issues.


The paper describes an original model to deal with the conceptual framework of the problem.


The acquisition currency game is interesting and it is worth playing it. It is clear that at a certain point the mechanism breaks and it is useful to see what happens. A mechanism that continues to increase the P/E does not exist; at a certain point there must be a limit.


The paper illustrates that the model convincingly describes some current behaviour of stock exchange prices and alerts about some dangerous situations.



Tagliavini, G. (2008), "The alchemy of acquisition currency: exclusive advantages of listed companies", Managerial Finance, Vol. 34 No. 4, pp. 271-281.



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Copyright © 2008, Emerald Group Publishing Limited

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