Abstract
| Language | English |
|---|---|
| Pages | 376-405 |
| Number of pages | 30 |
| Journal | Journal of Business Finance and Accounting |
| Volume | 35 |
| Issue number | 3-4 |
| DOIs | |
| Publication status | Published - May 2008 |
Fingerprint
Keywords
- revaluation gains
- acquisitions
- information asymmetry
- synergies
Cite this
}
Information asymmetry and bidders’ gains. / Draper, Paul; Paudyal, Krishna.
In: Journal of Business Finance and Accounting, Vol. 35, No. 3-4, 05.2008, p. 376-405.Research output: Contribution to journal › Article
TY - JOUR
T1 - Information asymmetry and bidders’ gains
AU - Draper, Paul
AU - Paudyal, Krishna
PY - 2008/5
Y1 - 2008/5
N2 - Undervalued firms with high information asymmetry may announce takeover bids to attract the attention of investors with a view to increasing the share price through revaluation. Announcement period returns to such bidders should include both revaluation and synergy gains although the revaluation gains should be confined to early bids and decline with the number of bids announced within a reasonable period. Our results offer strong support to these predictions. Undervalued firms with high pre-bid information asymmetry gain the most from early bids and the gains decline with the number of bids announced. These findings are robust to methods of payment, relative size of deals, target status, relatedness of businesses, domicile of target, M&A activities and alternative measures of information asymmetry, and confirm that gains from early bids include revaluation as well as synergy gains, especially in the cases of undervalued firms with high information asymmetry.
AB - Undervalued firms with high information asymmetry may announce takeover bids to attract the attention of investors with a view to increasing the share price through revaluation. Announcement period returns to such bidders should include both revaluation and synergy gains although the revaluation gains should be confined to early bids and decline with the number of bids announced within a reasonable period. Our results offer strong support to these predictions. Undervalued firms with high pre-bid information asymmetry gain the most from early bids and the gains decline with the number of bids announced. These findings are robust to methods of payment, relative size of deals, target status, relatedness of businesses, domicile of target, M&A activities and alternative measures of information asymmetry, and confirm that gains from early bids include revaluation as well as synergy gains, especially in the cases of undervalued firms with high information asymmetry.
KW - revaluation gains
KW - acquisitions
KW - information asymmetry
KW - synergies
U2 - 10.1111/j.1468-5957.2008.02082.x
DO - 10.1111/j.1468-5957.2008.02082.x
M3 - Article
VL - 35
SP - 376
EP - 405
JO - Journal of Business Finance and Accounting
T2 - Journal of Business Finance and Accounting
JF - Journal of Business Finance and Accounting
SN - 0306-686X
IS - 3-4
ER -