The underpricing of private targets

John W. Cooney, Thomas Moeller and Mike Stegemoller

Journal of Financial Economics, 2009, vol. 93, issue 1, 51-66

Abstract: We examine acquisitions of private firms with valuation histories and find a positive relation between acquirer announcement returns and target valuation revisions. Similar to other studies, acquirer announcement returns are positive, on average. However, positive acquirer announcement returns are mainly driven by targets that are acquired for more than their prior valuation. This relation is consistent with pricing effects associated with target valuation uncertainty and behavioral biases in negotiation outcomes.

Keywords: Private; acquisitions; Withdrawn; IPOs; Valuation; uncertainty (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:93:y:2009:i:1:p:51-66

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