Target Firm-Specific Information and Expected Synergies in Acquisitions
Washington University in Saint Louis - Olin School of Business
New York University (NYU) - Leonard N. Stern School of Business
December 4, 2009
This study investigates the relation between target’s firm-specific information expected synergies in acquisitions. We find that both combined (acquirer and target) stock returns around acquisition announcement and post acquisition performance of the combined entity positively associate with the pre-acquisition level of target firm-specific information. We also find that this association is driven mainly by cross-industry acquisitions. Further analysis suggests that while acquirer shareholders benefit from target firm-specific information, target shareholder returns around acquisition announcement decrease with target firm-specific information. Finally, we find that the likelihood of an announced acquisition to be withdrawn subsequent to the announcement decreases with target firm-specific information.
Number of Pages in PDF File: 50
Date posted: December 5, 2009 ; Last revised: December 17, 2009
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