Do Overvaluation-Driven Stock Acquisitions Really Benefit Acquirer Shareholders?

I study the effects of overvalued equity on acquisition activity and shareholder wealth, using managers' insider trades to measure overvaluation. I find that overvalued equity drives managers to make stock acquisitions, and such acquisitions destroy value for acquirer shareholders. Overvalued stock acquirers earn negative and lower returns in the short run and substantially underperform similarly overvalued nonacquirer firms in the long run. My results do not support the idea that managers can benefit shareholders by converting overvalued equity into real assets through stock acquisitions.