Deal Initiation in Mergers and Acquisitions

B-Tier
Journal: Journal of Financial and Quantitative Analysis
Year: 2018
Volume: 53
Issue: 6
Pages: 2389-2430

Authors (2)

Masulis, Ronald W. (UNSW Sydney) Simsir, Serif Aziz (not in RePEc)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We investigate the effects of target initiation in M&As. We find target-initiated deals are common and that important motives for these deals are target economic weakness, financial constraints, and negative economy-wide shocks. We determine that average takeover premia, target abnormal returns around merger announcements, and deal value to EBITDA multiples are significantly lower in target-initiated deals. This gap is not explained by weak target financial conditions. Adjusting for self-selection, we conclude that target managers’ private information is a major driver of lower premia in target-initiated deals. This gap widens as information asymmetry between merger partners rises.

Technical Details

RePEc Handle
repec:cup:jfinqa:v:53:y:2018:i:06:p:2389-2430_00
Journal Field
Finance
Author Count
2
Added to Database
2026-01-25