M&A rumors about unlisted firms

Yan Alperovych, Douglas Cumming, Veronika Czellar and Alexander Groh

Journal of Financial Economics, 2021, vol. 142, issue 3, 1324-1339

Abstract: We examine 68,044 completed or abandoned M&A transactions involving unlisted targets to determine the effect of transaction rumors on deal-closing propensity and transaction values. Estimation is challenging because rumors may be spread on purpose or emerge accidentally while transaction values are only observable for completed deals and no regulation requires to disclose them. We use indirect inference to overcome these challenges. We find that (a) M&A rumors are deal breakers, (b) rumored but closed deals have higher transaction values, and (c) the combined economic impact of (a) and (b) is negative: in expectation rumors destroy about 32% of transaction value.

Keywords: Mergers; Acquisitions; Rumors; Unlisted firms; Indirect inference (search for similar items in EconPapers)
JEL-codes: C15 G12 G14 G18 K22 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:142:y:2021:i:3:p:1324-1339

DOI: 10.1016/j.jfineco.2021.05.012

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