Working Paper: NBER ID: w13061
Authors: Leonce Bargeron; Frederik Schlingemann; Rene M. Stulz; Chad Zutter
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 from acquisitions and managers of firms with diffuse ownership may pay too much for acquisitions.
Keywords: No keywords provided
JEL Codes: G3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| public firm (G30) | target shareholder gains (G34) |
| private firm (L39) | target shareholder gains (G34) |
| private equity fund (G23) | target shareholder gains (G34) |
| managerial ownership of public bidders increases (G34) | difference in target shareholder gains diminishes (G34) |
| bidding behavior of private firms differs from public firms (D22) | difference in target shareholder gains (G34) |