Management Science, Forthcoming
51 Pages Posted: 5 Dec 2009 Last revised: 21 Sep 2015
Date Written: September 2, 2015
This study investigates whether firm-specific information about targets improves acquisition efficiency. We define acquisition efficiency as the total surplus generated by an acquisition (Vickrey 1961; Milgrom 1989) and measure it as the difference in the value of the merged firm and the sum of the two firms operating separately. We find a positive association between target firm-specific information and acquisition efficiency that is driven mainly by diversifying acquisitions. Additional evidence suggests that both the likelihood of the withdrawal of an announced acquisition and the likelihood of a future divestiture of a target decrease with target firm-specific information. Taken together, our findings suggest that the availability of this information improves merger and acquisitions efficiency.
Suggested Citation: Suggested Citation
Martin, Xiumin and Shalev, Ron, Target Firm-Specific Information and Acquisition Efficiency (September 2, 2015). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1518494 or http://dx.doi.org/10.2139/ssrn.1518494