The Accounting Review Vol. 95 No. 1 2020
The Information Provision in the Corporate Acquisition Process: Why Target Firms Obtain Multiple Fairness Opinions
Abstract
Using a hand-collected dataset for takeovers from 1996 to 2013, I examine why some target firms obtain a second fairness opinion and the associated wealth effects of doing so. I find that multiple opinions are more likely to be used in deals in which management/investment bank conflicts of interest are high—e.g., buyouts and stapled financing deals. In addition, the use of a second opinion has a significantly positive impact on target shareholders' wealth in these two types of deals. Fairness opinion valuation predominantly relies on accounting data, and the benefit of seeking a second opinion increases with a firm's earnings quality. Collectively, the results suggest that a second opinion is used to facilitate transactions.
- DOI
- 10.2308/accr-52444
- Volume
- 95
- Issue
- 1
- Pages
- 287-310
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib