How Do Diversity of Opinion and Information Asymmetry Affect Acquirer Returns?
Posted: 26 Jun 2008
Date Written: November 2007
We examine the theoretical predictions that link acquirer returns to diversity of opinion and information asymmetry. Theory suggests that acquirer abnormal returns should be negatively related to information asymmetry and diversity-of-opinion proxies for equity offers but not cash offers. We find that this is the case and that, more strikingly, there is no difference in abnormal returns between cash offers for public firms, equity offers for public firms, and equity offers for private firms after controlling for one of these proxies, idiosyncratic volatility.
Keywords: G31, G32, G34
Suggested Citation: Suggested Citation