M&A rumors about unlisted firms

Alexander Groh, Yan Alperovych (), Douglas J. Cumming and Veronika Czellar
Additional contact information
Alexander Groh: EM - EMLyon Business School
Yan Alperovych: EM - EMLyon Business School
Douglas J. Cumming: FAU - Florida Atlantic University [Boca Raton]
Veronika Czellar: SKEMA Business School (France, Lille) - SKEMA BS

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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: Indirect inference; Mergers; Acquisitions; Rumors; Unlisted Firms (search for similar items in EconPapers)
Date: 2021-12-01
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Published in Journal of Financial Economics, 2021, 142 (3), pp.1324 - 1339. ⟨10.1016/j.jfineco.2021.05.012⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05603422

DOI: 10.1016/j.jfineco.2021.05.012

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