Do Unlisted Targets Sell at Discounts?

51 Pages Posted: 27 Apr 2018  

Jeffrey F. Jaffe

University of Pennsylvania - Finance Department

Jan Jindra

U.S. Securities and Exchange Commission - Division of Economic and Risk Analysis

David J. Pedersen

Rutgers, The State University of New Jersey - Rutgers University, Camden

Torben Voetmann

The Brattle Group; University of San Francisco

Date Written: April 9, 2018

Abstract

Academic literature, practitioners, courts, and regulators routinely assert that both private and subsidiary targets sell at discounts relative to public targets. However, the empirical evidence to support this conclusion is thin. Our work alters the methodology from prior research to avoid biases due to both one-sided sample truncation and Jensen’s inequality. Following these changes, we find no evidence that unlisted targets sell at discounts. Our results hold under a number of different approaches and after controlling for known determinants of acquisition pricing.

Keywords: Subsidiary sale, private target, public target, discount, premium

JEL Classification: G3

Suggested Citation

Jaffe, Jeffrey F. and Jindra, Jan and Pedersen, David J. and Voetmann, Torben, Do Unlisted Targets Sell at Discounts? (April 9, 2018). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: https://ssrn.com/abstract=3159730

Jeffrey F. Jaffe

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-898-5615 (Phone)
215-898-6200 (Fax)

Jan Jindra (Contact Author)

U.S. Securities and Exchange Commission - Division of Economic and Risk Analysis ( email )

44 Montgomery Street
San Francisco, CA 94104
United States

David J. Pedersen

Rutgers, The State University of New Jersey - Rutgers University, Camden ( email )

Camden, NJ 08102
United States

Torben Voetmann

The Brattle Group ( email )

201 Mission Street
Suite 2800
San Francisco, CA 94105
United States
415-217-1000 (Phone)

HOME PAGE: http://www.brattle.com

University of San Francisco ( email )

2130 Fulton Street
San Francisco, CA 94117
United States

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