Why Do Private Acquirers Pay So Little Compared to Public Acquirers?

Leonce Bargeron, Frederick Schlingemann, René Stulz and Chad Zutter
Additional contact information
Leonce Bargeron: U Pittsburgh
Frederick Schlingemann: ?
Chad Zutter: U Pittsburgh

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: We find that the announcement gain to target shareholders from acquisitions is significantly lower if a private firm instead of a public firm makes the acquisition. Non-operating firms like private equity funds make the majority of private bidder acquisitions. On average, target shareholders receive 55% more if a public firm instead of a private equity fund makes the acquisition. There is no evidence that the difference in premiums is driven by observable differences in targets. We find that target shareholder gains depend critically on the managerial ownership of the bidder. In particular, there is no difference in target shareholder gains between acquisitions made by public bidders with high managerial ownership and by private bidders. Such evidence suggests that the differences in managerial incentives between private and public firms have an important impact on target shareholder gains and that managers of firms with diffuse ownership may pay too much for acquisitions.

JEL-codes: G3 (search for similar items in EconPapers)
Date: 2007-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.cob.ohio-state.edu/fin/dice/papers/2007/2007-8.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.cob.ohio-state.edu/fin/dice/papers/2007/2007-8.pdf [301 Moved Permanently]--> https://www.cob.ohio-state.edu/fin/dice/papers/2007/2007-8.pdf [301 Moved Permanently]--> https://fisher.osu.edu/fin/dice/papers/2007/2007-8.pdf)

Related works:
Journal Article: Why do private acquirers pay so little compared to public acquirers? (2008)
Working Paper: Why Do Private Acquirers Pay So Little Compared to Public Acquirers? (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2007-8

Access Statistics for this paper

More papers in Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().