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Industry IPOs, growth opportunities, and private target acquisitions

Listed author(s):
  • Aktas, Nihat
  • Cousin, Jean-Gabriel
  • Ozdakak, Ali
  • Zhang, Junyao
Registered author(s):

    As a result of increased information production and aggregation, acquiring companies may make merger decisions based on valuable information they extract from public markets. This paper examines acquisition decisions, and suggests a novel source of information for industry firms – the IPO market. The results provide evidence that industry IPOs signal the existence of available investment opportunities, in particular about privately-held firms. The proportion of private target acquisitions, stock payments, and acquirer announcement returns significantly correlates with signals derived from industry IPOs. Our results suggest that industry IPOs generate positive externalities by facilitating more efficient acquisition decisions.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0929119915001650
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    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 37 (2016)
    Issue (Month): C ()
    Pages: 193-209

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    Handle: RePEc:eee:corfin:v:37:y:2016:i:c:p:193-209
    DOI: 10.1016/j.jcorpfin.2015.12.016
    Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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