Information Disclosure and the Market for Acquiring Technology Companies

41 Pages Posted: 19 Jun 2019

See all articles by George Chondrakis

George Chondrakis

ESADE Business School

Carlos J. Serrano

Universitat Pompeu Fabra; Barcelona Graduate School of Economics (Barcelona GSE)

Rosemarie Ham Ziedonis

Boston University - Questrom School of Business

Date Written: June 6, 2019

Abstract

The market for acquiring technology-intensive companies is rife with information frictions and valuation challenges. Although such frictions can stifle trading activity, they also provide room for strategic gain. We investigate this dual role of information frictions in takeover markets by exploiting an institutional reform that released technological information in U.S. patent applications to the public domain. Leveraging cross-sectoral variation in the magnitude of new information disclosure, we find that greater disclosure leads to an uptick in acquisitions. In line with predictions from strategic factor market theory, however, we find that acquirers profit less, especially when target firms are private. This evidence is consistent with the view that information disclosure facilitates trade in takeover markets yet has a leveling effect on the returns to acquirers.

Keywords: Mergers and acquisitions, Patent disclosure, Information disclosure, Acquisition performance, AIPA

JEL Classification: O32, O34, G34, G14

Suggested Citation

Chondrakis, George and Serrano, Carlos J. and Ziedonis, Rosemarie Ham, Information Disclosure and the Market for Acquiring Technology Companies (June 6, 2019). Boston University Questrom School of Business Research Paper No. 3402154. Available at SSRN: https://ssrn.com/abstract=3402154 or http://dx.doi.org/10.2139/ssrn.3402154

George Chondrakis

ESADE Business School ( email )

Av. de Pedralbes, 60-62
Barcelona, 08034
Spain

Carlos J. Serrano (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

HOME PAGE: http://https://sites.google.com/site/carlosjserranoweb

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Rosemarie Ham Ziedonis

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

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