Liquidity and information asymmetry considerations in corporate takeovers

Abstract

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The Mystique of the Boutiques: The Wealth Effects of Boutique Banks in Mergers and Acquisitions

“…Second, our paper contributes to the literature on private target acquisitions and their impact on shareholders' wealth (Adra and Barbopoulos, 2018;Barbopoulos and Sudarsanam, 2012;Chang, 1998;Draper and Paudyal, 2006;Officer et al, 2009). This literature suggests that private target deals are associated with significant wealth gains, which tend to vary with the deal's payment method (Adra and Menassa, 2018;Chang, 1998), deal structure (Barbopoulos and Sudarsanam, 2012) and short-selling constraints (Ekkayokkaya et al, 2009), in addition to liquidity and information asymmetry considerations (Adra and Barbopoulos, 2019). Our paper adds a new dimension to this literature by showing that the gains from private target deals can be enhanced by the involvement of specialized and autonomous advisors that help acquirers address the informationally challenging aspect of these transactions.…”

“…It is worth noting that previous research on the impact of boutique banks on acquirer gains is exclusively focused on public target acquisitions (Loyeung, 2019;Song et al, 2013). The valuation of private companies, however, is much more informationally demanding than that of public ones due to opaque accounting environments, lack of publicly traded shares, and reduced disclosure standards (Adra and Barbopoulos, 2019;Cain et al, 2011;Chang, 1998;Draper and Paudyal, 2006;Officer et al, 2009). If the boutique banks' autonomy and sector-specialization allow them to address significant valuation challenges, we expect boutique banks' services to be more value-enhancing and more sought after in private target acquisitions.…”

Is corporate social responsibility an agency problem? An empirical note from takeovers

“…We regard those acquirers whose CSR performances are above the sample median as our treatment group and those acquirers whose CSR performances are below the sample median as our control group. Similar to Adra and Barbopoulos (2019) and we follow a two-step approach. First, we estimate the propensity score from a logit model.…”

Target Social Media Presence and Its Effects on Acquirers’ Decision

“…Other recent research has produced similar results. For instance, Adra and Barbopoulos (2019) and Borochin, Ghosh, and Huang (2019) show that the performance of the acquiring firm declines as the quality of the information environment improves. These findings support those of Chatterjee, John, and Yan (2012), who demonstrate that the overall synergy in M&As positively correlates with diverging opinions on the value of the target firm.…”