The medium of exchange in acquisitions: Does the private information of both acquirer and target matter?

Chemmanur, Thomas J.; Paeglis, Imants; Simonyan, Karen

doi:10.1016/j.jcorpfin.2009.08.004

Cited by 73 publications

(85 citation statements)

References 42 publications

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“…However, target firms will expect a cash payment when the acquirers' equity is undervalued, leading to payment methods acting as informational signals (Myers & Majluf, 1984). Chemmanur, Paeglis, & Simonyan (2009) find that acquirers choosing a share payment are overvalued and those using cash financing are correctly valued, while a greater overvaluation of the acquirer's shares increases the likelihood of a share payment. The second explanation for the positive impact of cash payments is that acquirers may choose to provide share payment when they have less information regarding the target's value (Hansen, 1987) or a low valuation of the target firm (Fishman, 1989).…”

Section: Payment Methodsmentioning

confidence: 99%

“…The second explanation for the positive impact of cash payments is that acquirers may choose to provide share payment when they have less information regarding the target's value (Hansen, 1987) or a low valuation of the target firm (Fishman, 1989). Similarly, Chemmanur et al (2009) argue that greater information asymmetries between acquirers and targets increase the likelihood of a cash offer.…”

Section: Payment Methodsmentioning

confidence: 99%

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The market valuation of M&A announcements in the United Kingdom

Andriosopoulos¹,

Yang

2016

International Review of Financial Analysis

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This paper investigates the short-term market reaction to UK acquirers announcing domestic and foreign mergers and acquisitions (M&As) from 2000-2010. We define acquirers as value, moderate and glamour acquirers based on equally weighted market-to-book terciles. We find that value acquirers outperform glamour acquirers during and after the M&A announcement. We also focus on the impact of institutional ownership and find that higher domestic, foreign and total institutional ownership leads to lower market reaction to M&A announcements. We also find that long-term institutional investors lead to a higher post-announcement market performance. Finally, we find that a higher domestic institutional ownership mitigates the typical poor short-term performance following M&A announcements of glamour acquirers

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Section: Payment Methodsmentioning

confidence: 99%

Section: Payment Methodsmentioning

confidence: 99%

The market valuation of M&A announcements in the United Kingdom

Andriosopoulos¹,

Yang

2016

International Review of Financial Analysis

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“…The PB ratio is used by Dong et al (2006) to measure investor misvaluation that can drive takeover markets. Following Chemmanur et al (2009), a valuation measure based on the industry average price-to-earnings ratio (INDPE) is also used. Following Weir et al (2005b), a measure of the growth in the net operating assets or the enterprise value is used (LNEVR).…”

Section: Valuation Metricsmentioning

confidence: 99%

Undervaluation and private equity takeovers

Rath¹,

Rashid

2016

Australian Journal of Management

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Undervaluation is often offered as an important consideration in private equity transactions. This study analyzes the importance of undervaluation, vis-à-vis information asymmetry, as a determining factor in 'going-private' transactions in Australia. Using a matched sample of firms from 1990 to 2012, we test a predictive choice model. The empirical results show that market undervaluation is a dominant factor in private equity takeovers. These results are robust to alternative measures of valuation, prevailing market conditions, money flows and subperiods.JEL Classification: G11, G15

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“…Marciukaityte and Varma (2008) and Nayar and Stock (2008) did not use their ratios in regressions, but only as descriptive statistics or for differences-in-means tests. 9 Blau and Fuller (2008), Brockman et al (2008), Chemmanur et al (2009), Clifford (2008, and Lee and Park (2009). Lee and Park (2009) define MBR as the "market-to-book" ratio in their descriptive statistics, but then redefine it as "the natural logarithm of the market-to-book ratio" in their regressions.…”

Section: Literature Reviewmentioning

confidence: 99%

“…14 The rest did not specify, and in only one case [when the independent variable was LN(BE/ME)] can we infer that they deleted such firms from any regressions. However, in tables of descriptive statistics, Chemmanur et al (2009) report a minimum value for M/B of − 10.44 and specified dropping BE b 0 firms only in one of the two models they used to find intrinsic value. Also, Thomas and Cotter (2007) report a negative average ME/BE value (− 1.05) for their subset of shareholder proposals regarding auditor independence.…”

Section: Sample Summarymentioning

confidence: 99%