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Article
Merger & Acquisition and Capital Expenditure in Health Care: Information Gleaned From Stock Price Variation
Inquiry
  • Wenjing Ouyang, University of the Pacific
  • Peter E. Hilsenrath, University of the Pacific
Document Type
Article
DOI
10.1177/0046958017692275
Publication Date
1-1-2017
Disciplines
Abstract
Investment, especially through merger and acquisition (M&A), is a leading topic of concern among health care managers. In addition, the implications of this activity for organization and market concentration are of great interest to policy makers. Using a sample of 2256 firm-year observations in the health care industry during the period from 1985 to 2011, this article provides novel evidence that managers learn from financial markets in making capital expenditure (CAPEX) and M&A investment decisions. Within the industry, managers in the Drugs subsector are most likely to do so, whereas managers in the Medical Equipment and Supplies are least likely to do so. We find informative stock prices improve firm financial performance. This article highlights the importance of financial markets for real economic activity in the health care industry.
Citation Information
Wenjing Ouyang and Peter E. Hilsenrath. "Merger & Acquisition and Capital Expenditure in Health Care: Information Gleaned From Stock Price Variation" Inquiry Vol. 54 Iss. 1 (2017) p. 1 - 7 ISSN: 0020-174X
Available at: http://works.bepress.com/peter-hilsenrath/206/