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Information Asymmetry in Acquisitions Lit Review (view source)
Revision as of 16:35, 26 July 2012
, 16:35, 26 July 2012→Key/Cross-Group Papers
*Uses Tobin's Q, but not as an IA measure.
*In particular, we find that an increase in breadth of ownership leads to significantly higher returns for cash offers for public companies. Such a result could be understood if breadth-of-ownership proxies for information asymmetry since, in the presence of information asymmetry, a cash offer is good news about the value of the bidder’s common stock.
**Breadth of ownership of the acquirer is the fraction of mutual funds that own the stock in the quarter prior to the acquisition. (Data source is not declared, but a reference puts it as: Mutual Fund Common Stock Holding/Transactions database obtained from CDA/Spectrum)
*When idiosyncratic volatility is added to the regression, dispersion of analyst forecasts is no longer significant... Finally, in regression (4) we add breadth of ownership and the mutual fund holding variable to regression (1). We find that breadth of ownership is not significant. It follows that idiosyncratic volatility dominates our proxies for diversity of opinion.
