Asymmetric Information and Target Firm Returns

Ettore Croci; Dimitris Petmezas; Nickolaus Travlos

doi:10.1080/1351847X.2011.599850

Asymmetric Information and Target Firm Returns

Ettore Croci
, Dimitris Petmezas
, Nickolaus Travlos

Research output: Contribution to journal › Article › peer-review

6 Citations (Scopus)

Abstract

This paper examines the relationship between asymmetric information and target firm returns in M&As. We argue that if managers possess favourable (unfavourable) asymmetric information, they will offer, ceteris paribus, high (low) premium, affecting target firm returns accordingly. We propose several proxies of asymmetric information. The empirical evidence strongly supports our hypothesis as we find that target firm returns are significantly negatively related to asymmetric information regarding synergy gains. Our results are robust after controlling for several target and deal characteristics.

Original language	English
Pages (from-to)	N/A-N/A
Journal	European Journal of Finance
Volume	2011
DOIs	https://doi.org/10.1080/1351847X.2011.599850
Publication status	Published - 2011

Keywords

Asymmetric Information
Mergers and Acquisitions
Target Firm Announcement Returns

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10.1080/1351847X.2011.599850

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title = "Asymmetric Information and Target Firm Returns",

abstract = "This paper examines the relationship between asymmetric information and target firm returns in M\&As. We argue that if managers possess favourable (unfavourable) asymmetric information, they will offer, ceteris paribus, high (low) premium, affecting target firm returns accordingly. We propose several proxies of asymmetric information. The empirical evidence strongly supports our hypothesis as we find that target firm returns are significantly negatively related to asymmetric information regarding synergy gains. Our results are robust after controlling for several target and deal characteristics.",

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author = "Ettore Croci and Dimitris Petmezas and Nickolaus Travlos",

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AU - Petmezas, Dimitris

AU - Travlos, Nickolaus

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AB - This paper examines the relationship between asymmetric information and target firm returns in M&As. We argue that if managers possess favourable (unfavourable) asymmetric information, they will offer, ceteris paribus, high (low) premium, affecting target firm returns accordingly. We propose several proxies of asymmetric information. The empirical evidence strongly supports our hypothesis as we find that target firm returns are significantly negatively related to asymmetric information regarding synergy gains. Our results are robust after controlling for several target and deal characteristics.

KW - Asymmetric Information

KW - Mergers and Acquisitions

KW - Target Firm Announcement Returns

KW - Asymmetric Information

KW - Mergers and Acquisitions

KW - Target Firm Announcement Returns

UR - http://hdl.handle.net/10807/9734

UR - http://www.tandfonline.com/doi/abs/10.1080/1351847x.2011.599850

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SN - 1351-847X

VL - 2011

SP - N/A-N/A

JO - European Journal of Finance

JF - European Journal of Finance

ER -

Asymmetric Information and Target Firm Returns

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Keywords

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