Industry IPOs, growth opportunities, and private target acquisitions

Nihat Aktas, Jean-Gabriel Cousin, Ali Ozdakak and Junyao Zhang

Journal of Corporate Finance, 2016, vol. 37, issue C, 193-209

Abstract: 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.

Keywords: Mergers and acquisitions; Industry IPOs; Underpricing; Private targets (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:37:y:2016:i:c:p:193-209

DOI: 10.1016/j.jcorpfin.2015.12.016

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