Adverse selection in acquisitions of small manufacturing firms: A comparison of private and public targets

Small Business Economics

Volumn 24, Issue 4, 2005, Pages 393-407

  Shen, Jung Chin ^a   Reuer, Jeffrey J ^b  

^a INSEAD   (France)

^b UNIVERSITY OF NORTH CAROLINA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 23844540645     PISSN: 0921898X     EISSN: None     Source Type: Journal    
DOI: 10.1007/s11187-005-5332-y     Document Type: Review

References (63)

1. Akerlof, G. A., 1970, 'The Market for "Lemons": Qualitative Uncertainty and the Market Mechanism', Quarterly Journal of Economics 84, 488-500.
2. Allen, F. and G. R. Faulhaber, 1989, 'Signaling by Underpricing in the IPO Market', Journal of Financial Economics 23, 303-323.
3. Amit, R., J. Brander and C. Zott, 1998, 'Why Do Venture Capital Firms Exist? Theory and Canadian Evidence', Journal of Business Venturing 13, 441-466.
4. Anand, B. and T. Khanna, 2000, 'Do Firms Learn to Create Value?', Strategic Management Journal 21(3), 295-316.
5. Andrade, G., M. Mitchell and E. Stafford, 2001, 'New Evidence and Perspectives on Mergers', Journal of Economic Perspectives 15, 103-120.
6. Balakrishnan, S. and M. P. Koza, 1993, 'Information Asymmetry, Adverse Selection, and Joint Ventures', Journal of Economic Behavior and Organization 20, 99-117.
7. Barney, J. B., 1988, 'Returns to Bidding Firms in Mergers and Acquisitions: Reconsidering the Relatedness Hypothesis', Strategic Management Journal 9, 71-78.
8. Baum, J. A. C., 1989, 'Liabilities of Newness, Adolescence, and Obsolescence in the Dissolution of Organizational Relationships and Organizations', Proceedings of the Administrative Science Association of Canada 10(5), 1-10.
9. Beatty, R. and J. R. Ritter, 1986, 'Investment Banking, Reputation, and the Underpricing of Initial Public Offerings', Journal of Financial Economics 15, 213-232.
10. Becchetti, L. and G. Trovato, 2002. 'The Determinants of Growth for Small and Medium Sized Firms: The Role of the Availability of External Finance', Small Business Economics 19, 291-306.
11. Begley, T. M., 1995, 'Usingfounder Status, Age of Firm, and Company Growth Rate as the Basis for Distinguishing Entrepreneurs from Managers of Smaller Businesses', Journal of Business Venturing 10, 249-263.
12. Berk, R. A., 1983, 'An Introduction to Sample Selection bias in Sociological Data', American Sociological Review 48, 386-398.
13. Bradley, M., A, Desai and E. H. Kim, 1983, 'The Rationale Behind Interfirm Tender Offers: Information or Synergy?', Journal of Financial Economics 11, 183-206.
14. Carter, R. and S. Manaster, 1990, 'Initial Public Offerings and Underwriter Reputation', Journal of Finance 45, 1045-1067.
15. Chang, S., 1998, 'Takeovers of Privately Held Targets, Methods of Payment, and Bidder Returns', Journal of Finance 53, 773-784.
16. Coff, R. W., 1999, 'How Buyers Cope with Uncertainty When Acquiring Firms in Knowledge-Intensive Industries: Caveat Emptor', Organization Science 10, 144-161.
17. Datar, S., R. Frankel and M. Wolfson, 2001, 'Earnouts: The Effects of Adverse Selection and Agency Costs on Acquisition Techniques', Journal of Law, Economics, and Organization 17, 201-238.
18. Deeds, D., D. DeCarolis and J. E. Coombs, 1999, 'Dynamic Capabilities and New Product Development in High Technology Ventures: An Empirical Analysis of New Biotechnology Firms', Journal of Business Venturing 15, 211-229.
19. Demsetz, H. and K. Lehn, 1985, 'The Structure of corporate ownership: Causes and consequences', Journal of Political Economy 93, 1155-1177.
20. Dess, G. G. and D. W. Beard, 1984, 'Dimensions of Organizational Task Environments', Administrative Science Quarterly 29, 52-73.
21. Dutta, S. and A. M. Weiss, 1997, 'The Relationship Between a Firm's Level of Technological Innovativeness and Its Pattern of Partnership Agreements', Management Science 43, 343-356.
22. Eckbo, B. E., R. M., Giammarino and R. L. Heinkel, 1990, 'Asymmetric Information and the Medium of Exchange in Takeovers: Theory and Tests', Review of Financial Studies 3, 651-675.
23. Eisenhardt, K. M. and C. B. Schoonhoven, 1996, 'Resource-Based View of Strategic Alliance Formation: Strategic and Social Effects in Entrepreneurial Firms', Organization Science 7, 136-150.
24. Ellingsen, T. and K. Rydqvist, 1997, The Stock Market as a Screening Device and the Decision to Go Public. Unpublished manuscript, Stockholm School of Economics.
25. Evans, D. and L. Leighton, 1986, 'Some Empirical Aspects of Entrepreneurship', American Economic Review 79, 519-535.
26. Field, L. C. and J. H. Mulherin, 1999, Newly-Public Firms as Acquisition Targets: A Comparison with Established Firms. Unpublished manuscript, Penn State University.
27. Hannan, M. and J. Freeman, 1989, Organizational Ecology, Cambridge, MA: Harvard University Press.
28. Haunschild, P. R., 1993, 'Interorganizational Imitation: The Impact of Interlocks on Corporate Acquisition Activity', Administrative Science Quarterly 38, 564-592.
29. Hellwig, M. F., 1980, 'On the Aggregation of Information in Competitive Markets', Journal of Economic Theory 22, 477-498.
30. Holmstrom, B. and J. Tirole, 1993, 'Market Liquidity and Performance Monitoring', Journal of Political Economy 101, 678-709.
31. Hopkins, H. D., 1987, 'Acquisition Strategy and the Market Position of Acquiring Firms', Strategic Management Journal 8, 535-547.
32. Ibbotson, R. G., J. L. Sindelar and J. R. Ritter, 1988, 'Initial Public Offerings', Journal of Applied Corporate Finance 1, 37-45.
33. Johnson, B. R., 1990, 'Toward a Multidimensional Model of Entrepreneurship: The Case of Achievement Motivation and the Entrepreneur', Entrepreneurship Theory and Practice 14, 39-54.
34. Kale, P., J. H. Dyer and H. Singh, 2002, 'Alliance Capability, Stock Market Response, and the Long-Term Alliance Success: The Role of the Alliance Function', Strategic Management Journal 23(8), 747-767.
35. Kogut, B., 1991, 'Joint Ventures and the Option to Expand and Acquire', Management Science 37, 19-33.
36. Levine, P. and S. Aaronovitch, 1981, 'The Financial Characteristics of Firms and Theories of Merge Activity', Journal of Industrial Economics 30, 149-172.
37. Levitt, B. and J. G. March, 1988, 'Organizational Learning', Annual Review of Sociology 14, 319-340.
38. McConnell, J. J. and R. R. Pettit, 1984, 'Application of the Modern Theory of Finance to Small Business Firms', in Horvitz and Pettit (eds.), Problems in Financing of Small Business, Vol. 42. Part A. Greenwich CT: JAI Press.
39. Mello, A. S. and J. E. Parsons, 1998, 'Going Public and the Ownership Structure of the Firm', Journal of Financial Economics 49, 79-109.
40. Mitchell, M. L. and J. H. Mulherin, 1996, 'The Impact of Industry Shocks on Takeover and Restructuring Activity', Journal of Financial Economics 41, 193-229.
41. Mowery, D. C., D. E. Oxley and B. C. Silverman, 1998, 'Technological Overlap and Interfirm Cooperation: Implications for the Resource-Based View of the Firm', Research Policy 27, 507-523.
42. Mulherin, J. H. and A. L. Boone, 2000, 'Comparing Acquisitions and Divestitures', Journal of Corporate Finance 6, 117-139.
43. Neter, J., W. Wasserman and M. H. Kutner, 1985, Applied Linear Statistical Models, Second Edition, Homewood, IL: Irwin.
44. Pagano, M., F. Panetta and L. Zingales, 1998, 'Why Do Companies Go Public? An Empirical Analysis', Journal of Finance 53, 27-64.
45. Palepu, K. G., 1986, 'Predicting Takeover Targets: A Methodological and Empirical Analysis', Journal of Accounting and Economics 8, 3-35.
46. Podolny, J. M., 1993, 'A Status-Based Model of Market Competition', American Journal of Sociology 98, 829-872.
47. Pratt, S., 1989, Valuing a Business, 2nd ed., Homewood, IL: Irwin Business One.
48. Rangan, S., 2000, 'The Problem of Search and Deliberation in Economic Action: When Social Networks Really Matter', Academy of Management Review 25, 813-828.
49. Reuer, J. J. and M. P. Koza, 2000, 'Asymmetric Information and Joint Venture Performance: Theory and Evidence for Domestic and International Joint Ventures', Strategic Management Journal 21, 81-88.
50. Reuer, J. J. and J.-C. Shen, 2003, 'The Extended Merger and Acquisition Process: Understanding the Role of IPOs in Corporate Strategy', European Management Journal 21, 192-198.
51. Reuer, J. J., and J.-C. Shen, forthcoming, 'Sequential Divestiture through Initial Public Offerings', Journal of Economic Behavior and Organization.
52. Rock, M. L., R. H. Rock and M. Sikora, 1994, The mergers and aAcquisitions Handbook, 2nd Edition. New York: McGraw-Hill.
53. Roy, D. A., and C. L. Simpson, 1981, 'Export Attitudes of Business Executives in the Smaller Manufacturing Firm', Journal of Small Business Management 19, 16-22.
54. Simkowiz, M. and R. J. Monroe, 1971, 'A Discriminant Analysis Function for Conglomerate Targets', Southern Journal of Business (November), 1-16.
55. Simon, C., 1989, 'The Effect of the 1933 Securities Act on Investor Information and the Performance of New Issues', American Economic Review 79, 295-318.
56. Singh, H. and C. A. Montgomery, 1987, 'Corporate Acquisition Strategies and Economic Performance', Strategic Management Journal 8, 377-386.
57. Sorensen, J. B. and T. E. Stuart, 2000, 'Aging, Obsolescence, and Organizational Innovation', Administrative Science Quarterly 45, 81-112.
58. Spence, A. M., 1974, Market Signaling: Informational Transfer in Hiring and Related Screening Processes, Cambridge, MA: Harvard University Press.
59. Stinchcombe, A. L., 1965, 'Social Structure and Organizations', in J. March (ed.), Handbook of Organizations, Chicago: Rand McNally, pp. 142-193.
60. Stuart, T. E., H. Hoang and R. C. Hybels, 1999, 'Interorganizational Endorsements and the Performance of Entrepreneurial Ventures', Administrative Science Quarterly 44, 315-349.
61. Yip, G. S., 1982, 'Diversification Entry: Internal Development versus Acquisition', Strategic Management Journal 3. 331-345.
62. Zahra, S. A., R. D. Ireland and M. Hitt, 2000, 'International Expansion by New Benture Firms: International Diversity, Modes of Market Entry, Technological Learning, and Performance', Academy of Management Journal 43(5), 925-950.
63. Zingales, L., 1995, 'Insider Ownership and the Decision to Go Public', Review of Economic Studies 62, 425-448.