TY - JOUR
T1 - The underpricing of private targets
AU - Cooney, John W.
AU - Moeller, Thomas
AU - Stegemoller, Mike
N1 - Funding Information:
We thank Craig Dunbar, the referee of this paper, Andres Almazan, Chris Barry, Scott Bauguess, Dan Bradley, Alex Butler, Chitru Fernando, Brad Jordan, Sandy Klasa, Steve Mann, Ron Masulis, Vassil Mihov, Jeffry Netter, Micah Officer, Ajai Singh, and seminar participants at the 2006 Frank Batten Young Scholars Conference at the College of William & Mary, the 2006 Lone Star Finance Symposium at Southern Methodist University, the 2007 FMA European Conference, Baylor University, California State University—Fullerton, Texas Christian University, Texas Tech University, and the US Securities and Exchange Commission for helpful comments. Thomas Moeller wishes to thank the Luther King Capital Management Center for Financial Studies at the Neeley School of Business at TCU for its financial support for this research.
PY - 2009/7
Y1 - 2009/7
N2 - 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.
AB - 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.
KW - Private acquisitions
KW - Valuation uncertainty
KW - Withdrawn IPOs
UR - http://www.scopus.com/inward/record.url?scp=67449103865&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2008.08.001
DO - 10.1016/j.jfineco.2008.08.001
M3 - Article
AN - SCOPUS:67449103865
SN - 0304-405X
VL - 93
SP - 51
EP - 66
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 1
ER -