Disclosure of proprietary information in the course of an acquisition

Alfred Wagenhofer

Accounting and Business Research, 2000, vol. 31, issue 1, 57-69

Abstract: Proprietary information plays a crucial role in the process of selling a firm or an operation, particularly if the prospective buyer is a competitor. Favourable information increases the selling price, but increases competition in case the buyer does not buy, and vice versa. This paper explores equilibrium disclosure strategies in such a setting. If the information is verifiable then a high degree of uncertainty as to the buyer's intention or alternatives results in less disclosure. If the information is unverifiable then a high degree of uncertainty is necessary for any information transfer in equilibrium. If information can be verified by the seller, in equilibrium this will generally drive out unverified disclosure.

Date: 2000
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DOI: 10.1080/00014788.2000.9729598

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