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Journal of Financial and Quantitative Analysis Vol. 54 No. 3 2019

Do Unlisted Targets Sell at Discounts?

Jeffrey F. Jaffe1,2; Jan Jindra3; David J. Pedersen4; Torben Voetmann5

1 California University of Pennsylvania · 2 University of Pennsylvania · 3 United States Securities and Exchange Commission · 4 School of Business - Cmd · 5 University of San Francisco

Abstract

Academic literature, practitioners, courts, and regulators routinely assert that both private and subsidiary targets sell at discounts relative to public targets. However, the empirical evidence to support this conclusion is thin. Our work alters the methodology from prior research to avoid biases due to both one-sided sample truncation and Jensen’s inequality. Following these changes, we find no evidence that unlisted targets sell at discounts. Our results hold under a number of different approaches and after controlling for known determinants of acquisition pricing.

DOI
10.1017/s0022109018001060
Volume
54
Issue
3
Pages
1371-1401
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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