Are Stock-Financed Takeovers Opportunistic?

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dc.contributor.authorEckbo, B. Espen
dc.contributor.authorMakaew, Tanakorn
dc.contributor.authorThorburn, Karin S
dc.date2023-05-17T17:55:59.000
dc.date.accessioned2023-05-22T19:17:18Z
dc.date.available2019-04-15T00:00:00Z
dc.date.issued2017-01-01
dc.date.submitted2017-08-28T08:24:38-07:00
dc.description.abstractThe more the target knows about the bidder, the more difficult it is to pay with overpriced shares. Thus, under bidder opportunism, the fraction of stock in the deal payment is lower with better informed targets. We test this simple prediction using information proxies reflecting industry relatedness and geographic location specific to the merging firms. We find instead that public bidders systematically use more stock in the payment when the target knows more about the bidder. While inconsistent with opportunism, this is as predicted when bidders are primarily concerned with adverse selection on the target side of the deal. Moreover, tests based on exogenous variation in bidder market-to-book ratios, identified using aggregate mutual fund outflows, also fail to support bidder opportunism. Finally, "cash-only" targets and potential competition from private bidders appear to place significant external pressure on public bidders to pay in cash.
dc.description.commentsThe article has not been published online yet in Journals website.
dc.identifier.urihttps://repository.upenn.edu/handle/20.500.14332/34546
dc.legacy.articleid1399
dc.legacy.fulltexturlhttps://repository.upenn.edu/cgi/viewcontent.cgi?article=1399&context=fnce_papers&unstamped=1
dc.rights© 2017. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
dc.source.issue52
dc.source.journalFinance Papers
dc.source.journaltitleJournal of Financial Economics
dc.source.peerreviewedtrue
dc.source.statuspublished
dc.subject.otherTakeovers
dc.subject.otherpayment method
dc.subject.othermispricing
dc.subject.othercapital structure
dc.subject.otherindustry relatedness
dc.subject.othergeographic location
dc.subject.otherBusiness
dc.subject.otherFinance and Financial Management
dc.titleAre Stock-Financed Takeovers Opportunistic?
dc.typeArticle
digcom.date.embargo2019-04-15T00:00:00-07:00
digcom.identifierfnce_papers/52
digcom.identifier.contextkey10668329
digcom.identifier.submissionpathfnce_papers/52
digcom.typearticle
dspace.entity.typePublication
upenn.schoolDepartmentCenterFinance Papers
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