Deal size, acquisition premia and shareholder gains

George Alexandridis, Kathleen P. Fuller, Lars Terhaar and Nickolaos G. Travlos

Journal of Corporate Finance, 2013, vol. 20, issue C, 1-13

Abstract: This study examines the contradictory predictions regarding the association between the premium paid in acquisitions and deal size. We document a robust negative relation between offer premia and target size, indicating that acquirers tend to pay less for large firms, not more. We also find that the overpayment potential is lower in acquisitions of large targets. Yet, they still destroy more value for acquirers around deal announcements, implying that target size may proxy, among others, for the unobserved complexity inherent in large deals. We provide evidence in favor of this interpretation.

Keywords: Public acquisitions; Target size; Premium; Acquirer returns (search for similar items in EconPapers)
JEL-codes: G14 G30 G34 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (83)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:20:y:2013:i:c:p:1-13

DOI: 10.1016/j.jcorpfin.2012.10.006

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