Are fairness opinions fair? The case of mergers and acquisitions
AbstractOver the period 1994-2003, 80% of targets and 37% of acquirers obtain a third-party assessment of the fairness of a merger or acquisition. These fairness opinions do not affect deal outcomes when used by targets, but they affect deal outcomes when used by acquirers. The deal premium is lower in transactions if the acquirer obtains a fairness opinion, and is further reduced if multiple advisors provide an opinion. However, the acquirer's announcement-period return is 2.3% lower if the acquirer has a fairness opinion, especially if the acquirer pays a high premium, indicating that investors are skeptical of these transactions.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Financial Economics.
Volume (Year): 91 (2009)
Issue (Month): 2 (February)
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Web page: http://www.elsevier.com/locate/inca/505576
Fairness opinion Merger Conflict of interest Deal premium Announcement return;
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