The Role of Independent Expert Reports in Australian M&A Market

Giang Duc Nguyen

International Review of Finance, 2018, vol. 18, issue 2, 149-167

Abstract: This paper examines the role of independent expert reports in Australian M&A market. Using a comprehensive sample of 2888 transactions between 1991 and 2013, I find that a “neither fair nor reasonable†opinion forces the acquirer to increase the offer premium by 5%, ceteris paribus. The finding remains robust after controlling for the target's bargaining power measured by the residual values of initial premiums that are not explained by observable firm†deal characteristics. The target that has a weak bargaining position tends to receive less effect of an unfavorable report. In addition, a “fair and reasonable†opinion increases the probability of success, while the unfavorable report does not affect the transaction outcome. I identify the causal effect of expert opinions by differences†in†differences analysis using the Duke case decision.

Date: 2018
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