Acquisitions of private vs. public firms: Private information, target selection, and acquirer returns

Strategic Management Journal

Volumn 28, Issue 9, 2007, Pages 891-911

  Capron, Laurence ^a   Shen, Jung Chin ^b  

^a INSEAD   (France)

^b YORK UNIVERSITY   (Canada)

Author keywords

Acquirer return; Acquisitions; Private firms; Private information; Target selection

Indexed keywords

DATA PROCESSING; INDUSTRIAL MANAGEMENT; INVENTORY CONTROL;

CORPORATE CONTROL; PRIVATE FIRMS; PRIVATE INFORMATION; STOCK MARKET; TARGET SELECTION;

MERGERS AND ACQUISITIONS;

EID: 34547849644     PISSN: 01432095     EISSN: 10970266     Source Type: Journal    
DOI: 10.1002/smj.612     Document Type: Review

References (53)

1. Agrawal A, Jaffe J, Mandelker G. 1992. The post-merger performance of acquiring firms: a re-examination of an anomaly. Journal of Finance 47(4): 1605-1621.
2. Akerlof GA. 1970. The market for 'lemons': quality uncertainty and the market mechanism. Quarterly Journal of Economics 84(3): 488-500.
3. Anand J, Capron L, Mitchell W. 2005. Using acquisitions to access multinational diversity: thinking beyond the domestic versus cross-border M&A comparison. Industrial and Corporate Change 14(2): 191-224.
4. Andrade G, Mitchell M, Stafford E. 2001. New evidence and perspectives on mergers. Journal of Economic Perspectives 15(2): 103-120.
5. Arikan AM. 2002. What type of assets is worth buying through mergers and acquisitions? Working paper, Ohio State University, Columbus, OH.
6. Arikan I. 2005. In the market for firms, how should a firm be sold? In Advances in Mergers and Acquisitions, Vol. 4, Cooper GL, Finkelstein S (eds). JAI Press: Greenwich, CT; 181-208.
7. Bajaj M, Denis D, Ferris S, Sarin A. 2001. Firm value and marketability discounts, Working paper, SSRN.
8. Balakrishna S, Koza MP. 1993. Information asymmetry, adverse selection, and joint ventures. Journal of Economic Behavior and Organization 20(1): 99-117.
9. Barney JB. 1986. Strategic factor markets: expectations, luck and business strategy. Management Science 32(10): 1231-1241.
10. Barney JB. 1988. Returns to bidding firms in mergers and acquisitions: reconsidering the relatedness hypothesis. Strategic Management Journal, Summer Special Issue 9: 71-78.
11. Becchetti L, Trovato G. 2002. The determinants of growth for small and medium sized firms: the role of the availability of external finance. Small Business Economics 19(4): 291-306
12. Boone A, Mulherin JH. 2002. Corporate restructuring and corporate auction. Working paper, Claremont College, Claremont, CA.
13. Capron L. 1999. The long-term performance of horizontal acquisitions. Strategic Management Journal 20(11): 987-1018.
14. Capron L, Pistre N. 2002. When do acquirers earn abnormal returns? Strategic Management Journal 23(9): 781-794.
15. Capron L, Dussauge P, Mitchell W. 1998. Resource redeployment following horizontal acquisitions in Europe and North America, 1988-1992. Strategic Management Journal 19(7): 631-661.
16. Chang S. 1998. Takeovers of privately held targets, methods of payment, and bidder returns. Journal of Finance 53(2): 773-784.
17. Chatterjee S. 1986. Types of synergy and economic value: the impact of acquisitions on merging and rival firms. Strategic Management Journal 7(2): 119-139.
18. Chemmanur T, Fulghieri P. 1999. A theory of the going public decision. Review of Financial Studies 12(Summer): 249-279.
19. Coff RW. 1999. How buyers cope with uncertainty when acquiring firms in knowledge-intensive industries: caveat emptor. Organization Science 10(2): 144-161.
20. Deeds D, DeCarolis D, Coombs JE. 1999. Dynamic capabilities and new product development in high technology ventures: an empirical analysis of new biotechnology firms. Journal of Business Venturing 15(3): 211-229.
21. Dillman D. 1978. Mail and Telephone Surveys: The Total Design Method. Wiley: New York.
22. Faceio M, McConnell J, Stolin D. 2006. Returns to acquirers of listed and unlisted targets. Journal of Financial and Quantitative Analysis 41(1): 197-220.
23. Fuller K, Netter J, Stegemoller M. 2002. What do returns to acquiring firms tell us? Evidence from firms that make many acquisitions. Journal of Finance 57(4): 1763-1793.
24. Graebner ME. 2004. Momentum and serendipity: how acquired leaders create value in the integration of technology firms, Strategic Management Journal, Special Issue 25(7-8): 751-778.
25. Graebner ME, Eisenhardt KM. 2004. The seller's side of the story: acquisition as courtship and governance as syndicate in entrepreneurial firms, Administrative Science Quarterly 49(Sept.): 366-403.
26. Hall B. 2002. The financing of research and development. Oxford Review of Economic Policy 18(1): 35-51.
27. Heckman JJ. 1979. Sample selection bias as a specification error. Econometrica 47(1): 153-161
28. Henderson AD. 1999. Firm strategy and age dependence: a contingency view of the liabilities of newness, adolescence, and obsolescence. Administrative Science Quarterly 44(June): 281-314.
29. Itami H. 1987. Mobilizing Intangible Assets. Harvard University Press; Cambridge, MA.
30. Jarell SL. 1998. The effects of total quality management on corporate performance: an empirical investigation. Journal of Business 71(2): 253-305
31. Koeplin J, Sarin A, Shapiro AC. 2000. The private company discount. Journal of Applied Corporate Finance 12(4): 94-101.
32. Kooli M, Kortas M, L'Her JF. 2003. A new examination of the private company discount. Journal of Private Equity 6(3): 48-55.
33. Lubatkin MH. 1987. Merger strategies and stockholder value. Strategic Management Journal 8(1): 39-53.
34. Makadok R, Barney JB. 2001. Strategic factor market intelligence: an application of information economics to strategy formulation and competitor intelligence. Management Science 47(12): 1621-1638.
35. Masten S. 1993. Transaction costs, mistakes, and performance: assessing the importance of governance. Managerial and Decision Economics 14(2): 119-129.
36. McWilliams A, Siegel D. 1997. Event studies in management research: theoretical and empirical issues. Academy of Management Journal 40(3): 626-657.
37. Milgrom PR. 1987. Auction theory. In Advances in Economic Theory, Bewley TF (ed). Cambridge University Press: Cambridge, U.K.; 1-31.
38. Moeller SB, Schlingemann FP, Stolz RM. 2004. Do shareholders of acquiring firms gain from acquisitions? Journal of Financial Economics 73(2): 201-228.
39. Pagano M, Panetta F, Zingales L. 1998. Why do companies go public? An empirical analysis. Journal of Finance 53(1): 27-64.
40. Reuer J, Ragozzino R. 2007. Adverse selection and M&A design: the roles of alliances and IPOs. Journal of Economic Behavior and Organization. Forthcoming.
41. Reuer J, Shen JC. 2004. Sequential divestiture through initial public offerings. Journal of Economic Behavior and Organization 54(2): 249-266.
42. Rosenkopf L, Almeida P. 2003. Overcoming local search through alliances and mobility. Management Science 49(6): 751-766.
43. Sanders WMG, Boivie S. 2004. Sorting things out: valuation of new firms in uncertain markets. Strategic Management Journal 25(2): 167-186.
44. Schneper W, Guillen M. 2004. Stakeholder rights and corporate governance: a cross-national study of hostile takeovers. Administrative Science Quarterly 49(June): 163-195.
45. Schwert GW. 1996. Markup pricing in mergers and acquisitions. Journal of Financial Economics 41(2): 153-192.
46. Seth A. 1990. Value creation in acquisitions: a re-examination of performance issues. Strategic Management Journal 11(2): 99-115.
47. Shaver JM. 1998. Accounting for endogeneity when assessing strategy performance: does entry mode choice affect survival? Management Science 44(4): 571-585.
48. Shen JC Reuer J. 2005. Adverse selection in acquisitions of small manufacturing firms: a comparison of public with private targets. Small Business Economics 24(4): 393-407.
49. Singh H, Montgomery CA. 1987. Corporate acquisition strategies and economic performance. Strategic Management Journal 8(4): 377-386.
50. Spence AM. 1974. Market Signalling: Informational Transfer in Hiring and Related Screening Processes. Harvard University Press: Cambridge, MA.
51. Stuart TE, Hoang H, Hybels RC. 1999. Interorganizational endorsements and the performance of entrepreneurial ventures. Administrative Science Quarterly 44(June): 315-349.
52. Thompson RB, Thomas RS. 2004. The new look of shareholder litigation: acquisition-oriented class actions. Vanderbilt Law Review 57(Jan.): 133-209.
53. Villalonga B, Amit R. 2006. How do family ownership, control, and management affect firm value? Journal of Financial Economics 80(2): 385-417.