TY - JOUR
T1 - Determinants and shareholder wealth effects of the sales method in acquisitions
AU - Schlingemann, Frederik
AU - Wu, Haiyan
PY - 2015
Y1 - 2015
N2 - We analyze the sales method for a sample of 575 acquisitions announced between 1998 and 2012 and find that targets choose auctions to maximize the target takeover premium through greater competition and to relax their financial constraints. Auctions, compared to negotiated deals, are associated with significantly higher target announcement returns, especially for relatively small targets. Bidder returns are positively related to auctions for bidders acquiring relatively small targets, not for the full sample. Taking into account size differences, we find that auctions, decrease target gains and increase bidder gains expressed in dollars.
AB - We analyze the sales method for a sample of 575 acquisitions announced between 1998 and 2012 and find that targets choose auctions to maximize the target takeover premium through greater competition and to relax their financial constraints. Auctions, compared to negotiated deals, are associated with significantly higher target announcement returns, especially for relatively small targets. Bidder returns are positively related to auctions for bidders acquiring relatively small targets, not for the full sample. Taking into account size differences, we find that auctions, decrease target gains and increase bidder gains expressed in dollars.
U2 - 10.1016/j.jbankfin.2015.06.017
DO - 10.1016/j.jbankfin.2015.06.017
M3 - Article
VL - 59
SP - 469
EP - 485
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
SN - 0378-4266
ER -