We provide evidence that large termination fees mitigate contracting problems in acquisitions of targets with high information asymmetry. Large fees are more common if targets face financial constraints or distress. Deals with large termination fees are less likely to be consummated, consistent with large fees allowing acquirers to recover bidding costs when facing a high risk of bid failure. We correct for the endogenous selection of large termination fees and present evidence that managers negotiate large fees in exchange for higher premiums. This is in contrast with prior evidence that suggests large fees result from managerial self-interest and harm target shareholders.

We document that US IPOs that take place during a world cup in football (soccer), compared to IPOs before or after, exhibit 9% lower underpricing and 6% lower price adjustment. IPOs during world cups receive less attention from foreign investors and exhibit significantly higher long-run returns. Our results are robust to excluding the IPO bubble period of 1999 and 2000, including only listings during summer months, controlling for overall market sentiment and market conditions, and to using various matched samples of non-world cup IPOs. Firm characteristics of world cup IPOs are indistinguishable from those of non-world cup IPOs, suggesting that selection is not driving the results. Consistent with prior studies showing that world cups affect market sentiment, we show that this extends to US IPOs, where lower sentiment, driven by foreign investors, leads to reduced investor attention and lower valuations.

We examine the information role of financial advisors by focusing on mergers and acquisitions in which acquiring firms hire target firms’ ex-advisors. We document that by employing targets’ ex-advisors, acquirers pay lower takeover premiums and secure a larger proportion of merger synergies. The corresponding targets exhibit lower announcement returns and are less likely to be propositioned by competing bidders. These results indicate that acquirers take advantage of value-relevant information about targets through targets’ ex-advisors, and achieve bargaining advantages in deal negotiations. In contrast, we document no discernible value effects when targets hire acquirers’ ex-advisors, suggesting that the information role of acquirers’ ex-advisors hired by targets is weaker than that of targets’ ex-advisors hired by acquirers.

Packaged private placements (PPP) in Australia allow all eligible shareholders to purchase shares at the same price as offered to institutions in the private placement component of the offering. Announcement returns for PPPs are negative on average but are positive for offers with large placements to institutions. Returns also exhibit higher sensitivity to private placement size in PPPs than in traditional private placements, consistent with larger certification benefits accruing to PPP issuers. Retail shareholders experience 3.9% ownership dilution in PPPs as compared to 8.6% dilution in equivalent traditional private placements, and their participation is positively related to the size of the private placement component. Long run wealth related benefits associated with participation are present in all PPPs. Our results provide insights for regulators who wish to encourage companies to consider raising capital from small shareholders by utilizing offer structures that have been typically only accessible to sophisticated investors.