Mergers and Target Transparency

dc.contributor.authorHasan, Iftekhar
dc.contributor.authorKallberg, Jarl G.
dc.contributor.authorLiu, Crocker H.
dc.contributor.authorSun, Xian
dc.description.abstractWe empirically investigate the hypothesis that the less transparent (more difficult to value) the target’s assets are the more likely it is that the acquiring firm can obtain higher short- and long-term returns. We analyze a sample of 1,538 friendly acquisitions partitioned in two separate dimensions: acquisitions of public versus private firms, and acquisitions of a firm’s assets versus acquisitions of a firm’s assets and its management. Using a sample of (nondiversifying) real estate transactions with a public REIT as the acquirer, we find that acquisitions of public firms have insignificant short-term abnormal returns. Acquisitions of private targets have positive and significant short-term abnormal returns. The acquirer’s abnormal returns are higher in both cases when the transactions involve acquisition of the target firm’s management. We find parallel results when analyzing the acquirer’s Q over the merger year and the three following years. Our conclusions are robust to the type of financing (cash, stock, or a combination) used in the acquisition.
dc.description.legacydownloadsLiu81_Mergers.pdf: 254 downloads, before Aug. 1, 2020.
dc.rightsRequired Publisher Statement: © Emerald. Final version published as: Hasan, I., Kallberg, J. G., Liu, C. H., & Sun, X. (2014). Mergers and target transparency. In K. Johns, A. K. Makhija, & S. P. Ferris (Eds.), Advances in financial economics: Vol. 17. Corporate governance in the US and global settings (pp. 193-227). doi: 10.1108/S1569-373220140000017001 Reprinted with permission. All rights reserved.
dc.subjectmergers and acquisitions
dc.subjectinformation asymmetry
dc.subjectvalue of firms
dc.titleMergers and Target Transparency
local.authorAffiliationHasan, Iftekhar: Fordham University
local.authorAffiliationKallberg, Jarl G.: Washington State University
local.authorAffiliationLiu, Crocker H.: Cornell University School of Hotel Administration
local.authorAffiliationSun, Xian: Johns Hopkins Carey School of Business
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