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- Title
Exploring the Double-Sided Effect of Information Asymmetry and Uncertainty in Mergers and Acquisitions.
- Authors
Luypaert, Mathieu; Caneghem, Tom
- Abstract
We examine the joint effect of bidder and target information asymmetry and uncertainty on the payment consideration and subsequent wealth effects in a large sample of acquisitions with both listed and private targets. In line with a risk-sharing argument, we find that acquisitions of targets characterized by higher uncertainty are more likely to be settled with stock. In contrast, higher target information asymmetry increases the likelihood of a cash payment, consistent with bidders strategically exploiting superior information. Acquirers of more opaque targets obtain a larger fraction of total acquisition gains and avoid sharing these gains with target shareholders by offering cash.
- Subjects
MERGERS &; acquisitions; STOCKHOLDERS; INVESTORS; CORPORATION law; CORPORATIONS
- Publication
Financial Management (Wiley-Blackwell), 2017, Vol 46, Issue 4, p873
- ISSN
0046-3892
- Publication type
Article
- DOI
10.1111/fima.12170