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Value Ambiguity and Gains from Acquisitions of Unlisted Targets

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Author Info
Leonidas Barbopoulos
Krishna Paudyal
Gioia Pescetto

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Abstract

This paper examines the announcement period and the post acquisition gains of UK acquirers of unlisted targets that are subject to value-ambiguity. The evidence shows that target’s age, size, intangibility of assets, and investments can explain the variations in bidding firm’s abnormal returns both in the short- and in the long-run. The findings further show that the gains to bidding firms acquiring unlisted targets are associated with the difficulty in valuing unlisted targets and the means of payment used.

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Publisher Info
Paper provided by Centre for Research into Industry, Enterprise, Finance and the Firm in its series CRIEFF Discussion Papers with number 0810.

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Date of creation: Oct 2008
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Handle: RePEc:san:crieff:0810

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Postal: School of Economics and Finance, University of St. Andrews, Fife KY16 9AL
Phone: 01334 462420
Web page: http://www.st-and.ac.uk/%7Ewww_crieff/discpaps.html

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Related research
Keywords: mergers and acquisitions; abnormal returns; value-ambiguity; unlisted firms; method of payment.;

Find related papers by JEL classification:
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kathleen Fuller & Jeffry Netter & Mike Stegemoller, 2002. "What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions," Journal of Finance, American Finance Association, vol. 57(4), pages 1763-1793, 08. [Downloadable!] (restricted)
  2. Saeyoung Chang, 1998. "Takeovers of Privately Held Targets, Methods of Payment, and Bidder Returns," Journal of Finance, American Finance Association, vol. 53(2), pages 773-784, 04. [Downloadable!] (restricted)
  3. Mara Faccio & Ronald W. Masulis, 2005. "The Choice of Payment Method in European Mergers and Acquisitions," Journal of Finance, American Finance Association, vol. 60(3), pages 1345-1388, 06. [Downloadable!] (restricted)
  4. Asquith, Paul, 1983. "Merger bids, uncertainty, and stockholder returns," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 51-83, April. [Downloadable!] (restricted)
  5. Paul Draper & Krishna Paudyal, 2006. "Acquisitions: Private versus Public," European Financial Management, Blackwell Publishing Ltd, vol. 12(1), pages 57-80. [Downloadable!] (restricted)
  6. Paul Draper & Krishna Paudyal, 2008. "Information Asymmetry and Bidders' Gains," Journal of Business Finance & Accounting, Blackwell Publishing, vol. 35(3-4), pages 376-405. [Downloadable!] (restricted)
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This page was last updated on 2009-11-24.

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