Do Unlisted Targets Sell at Discounts?
51 Pages Posted: 27 Apr 2018
Date Written: April 9, 2018
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: Suggested Citation