Review of Finance Vol. 13 No. 3 2009

Target-firm information asymmetry and acquirer returns

Micah S. Officer¹; Annette B. Poulsen²; Mike Stegemoller³

¹ University of Southern California a Marshall School of Business , · ² University of Georgia b Terry College of Business , · ³ Texas Tech University c Rawls College of Business ,

Abstract

We show that acquirer returns are significantly higher in stock-swap acquisitions of difficult-to-value targets, as measured by R&D intensity and idiosyncratic return volatility. This finding contributes to an explanation of the determinants of, and value gains from, using stock as a method of payment. The effects of target-valuation uncertainty on both the method of payment and the market reaction to acquisitions are more likely to be apparent in samples of private acquisitions, as these effects can be masked in samples of acquisitions of publicly held targets. Nevertheless, our results hold for publicly traded targets in multivariate analysis.

DOI

10.1093/rof/rfn017

Volume

13

Issue

3

Pages

467-493

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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