Minority Acquisitions and Information Risk

52 Pages Posted: 25 Aug 2016 Last revised: 25 Sep 2019

See all articles by Peng Huang

Peng Huang

University of Waikato

Mark Humphery-Jenner

UNSW Business School; Financial Research Network (FIRN)

Ronan Powell

University College Dublin (UCD) - Michael Smurfit Graduate School of Business

Date Written: February 24, 2019

Abstract

We show that minority acquisitions are more common for targets in countries with worse information environments. The effect is stronger for diversifying acquisitions, deals for high-tech targets, and when the bidder has prior acquisition experience. Minority acquisitions can also be a ‘stepping stone’ to a controlling acquisition, especially in countries with worse information environments. We also show that worse target information environments increase majority deal failure, and the time to complete successful deals, whereas stepping stone deals increase success rates and the time to complete. Our results suggest that bidders use minority acquisitions when they confront informational barriers. The findings are robust to endogeneity and other econometric concerns.

Keywords: mergers, major acquisitions, minority acquisitions, cross-country, cross-border

JEL Classification: G34

Suggested Citation

Huang, Peng and Humphery-Jenner, Mark and Powell, Ronan G., Minority Acquisitions and Information Risk (February 24, 2019). 29th Australasian Finance and Banking Conference 2016, Michael J. Brennan Irish Finance Working Paper Series Research Paper No. 19-7, Available at SSRN: https://ssrn.com/abstract=2826044 or http://dx.doi.org/10.2139/ssrn.2826044

Peng Huang

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Mark Humphery-Jenner

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Ronan G. Powell (Contact Author)

University College Dublin (UCD) - Michael Smurfit Graduate School of Business ( email )

Blackrock, Co. Dublin
Ireland

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