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The Wealth Effects of Fairness Opinions in Takeovers

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  • Tingting Liu

Abstract

This paper explores the wealth effects associated with a bidder's decision to solicit a fairness opinion in a takeover transaction. Using a hand‐collected sample with bidders’ filing proxy statements, this paper finds that the use of fairness opinions does not negatively affect bidder shareholders’ wealth, a finding that contradicts prior studies’ findings. In addition, I find a positive wealth effect associated with bidder use of fairness opinions in the post‐Rule 2290 period. Collectively, these results are consistent with a fairness opinion being used by bidder management as a means to facilitate transactions rather than a mechanism to entrench management.

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  • Tingting Liu, 2018. "The Wealth Effects of Fairness Opinions in Takeovers," The Financial Review, Eastern Finance Association, vol. 53(3), pages 533-568, August.
    • Handle: RePEc:bla:finrev:v:53:y:2018:i:3:p:533-568
    DOI: 10.1111/fire.12168
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