Geographic Distance and Corporate Acquisitions: Signals from IPO Firms

Ragozzino, R., & Reuer J. J. 2011. Geographic distance and corporate acquisitions: Signals from IPO firms. Strategic Management Journal, 32: 876-894.

41 Pages Posted: 24 Aug 2005 Last revised: 8 Apr 2014

See all articles by Roberto Ragozzino

Roberto Ragozzino

University of Liverpool; University of Tennessee

Jeffrey J. Reuer

Purdue University - Krannert School of Management

Date Written: January 1, 2011

Abstract

This paper examines acquisitions of firms after they have undergone initial public offerings (IPOs). Combining insights from information economics with recent research on geographic distance in various market settings, the analysis investigates whether the presence or absence of different signals on IPO firms has an impact on the geographic proximity of acquirers. The central proposition we develop and test is that specific characteristics of IPOs – venture capitalist backing, investment bank reputation, and underpricing of issued shares – convey signals on these firms, which can facilitate acquisitions by more remote acquirers who are more likely to face the risk of adverse selection.

Keywords: Merger, acquisition, entrepreneurship, IPO, distance

JEL Classification: G3, M13

Suggested Citation

Ragozzino, Roberto and Reuer, Jeffrey J., Geographic Distance and Corporate Acquisitions: Signals from IPO Firms (January 1, 2011). Ragozzino, R., & Reuer J. J. 2011. Geographic distance and corporate acquisitions: Signals from IPO firms. Strategic Management Journal, 32: 876-894.. Available at SSRN: https://ssrn.com/abstract=785915 or http://dx.doi.org/10.2139/ssrn.785915

Roberto Ragozzino (Contact Author)

University of Liverpool ( email )

Chatham Street
Liverpool, L69 7ZA
United Kingdom

HOME PAGE: http://https://www.liverpool.ac.uk/management/staff/roberto-ragozzino/

University of Tennessee ( email )

The Boyd Center for Business and Economic Research
Knoxville, TN 37996
United States

HOME PAGE: http://robertoragozzino.com

Jeffrey J. Reuer

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

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