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Limited information and the sustainability of unlisted-target acquirers’ returns

Ekkayokkaya, Manapol and Holmes, Phil and Paudyal, Krishna (2009) Limited information and the sustainability of unlisted-target acquirers’ returns. Journal of Business Finance and Accounting, 36 (9-10). pp. 1201-1227. ISSN 0306-686X

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Abstract

Relaxed disclosure requirements of unlisted firms, as compared to publicly listed company, lead to limited quality and quantity of information at bid announcements, causing difficulty in valuing gains from mergers. This raises the question: are the frequently reported superior announcement-period gains to unlisted-target acquirers sustainable in the long run? Our results for the UK show that unlisted-target acquirers gain on announcement, but suffer a substantial loss in the long run. This reversal in fortune of unlisted-target acquirers is in sharp contrast to the performance of listed-target acquirers in the UK. Therefore, short-run gains for unlisted-target acquirers may result from investors' excessive optimism when faced with limited and biased information.

Item type: Article
ID code: 30160
Keywords: acquisitions, agency considerations, limited information, target status, Finance
Subjects: Social Sciences > Finance
Department: Strathclyde Business School > Accounting and Finance
Related URLs:
    Depositing user: Pure Administrator
    Date Deposited: 29 Mar 2011 15:33
    Last modified: 12 Mar 2012 11:24
    URI: http://strathprints.strath.ac.uk/id/eprint/30160

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