The underpricing of private targets

John W. Cooney, Thomas Moeller, Mike Stegemoller

Research output: Contribution to journalArticlepeer-review

45 Scopus citations


We examine acquisitions of private firms with valuation histories and find a positive relation between acquirer announcement returns and target valuation revisions. Similar to other studies, acquirer announcement returns are positive, on average. However, positive acquirer announcement returns are mainly driven by targets that are acquired for more than their prior valuation. This relation is consistent with pricing effects associated with target valuation uncertainty and behavioral biases in negotiation outcomes.

Original languageEnglish
Pages (from-to)51-66
Number of pages16
JournalJournal of Financial Economics
Issue number1
StatePublished - Jul 2009


  • Private acquisitions
  • Valuation uncertainty
  • Withdrawn IPOs


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