Secrets of Finances and Payday Loans

The high correlation between M&A activity and equity market performance clearly shows that M&A was a major driver of the equity bubble of the late 1990s. Sometimes even mergers that did not create synergies were rewarded by rising stock prices on the side of the overtaking parties. It was obvious that not every merger was going to increase operating profitability.

Yet, the degrees of freedom in goodwill accounting helped to grow earnings per share without actually increasing profit levels. At the height of the equity bubble, investors encouraged companies to use their own overvalued equity to pay for the overvalued assets of another company.