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Do Unlisted Targets Sell at Discounts?

Author

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  • Jaffe, Jeffrey F.
  • Jindra, Jan
  • Pedersen, David J.
  • Voetmann, Torben

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.

Suggested Citation

  • Jaffe, Jeffrey F. & Jindra, Jan & Pedersen, David J. & Voetmann, Torben, 2019. "Do Unlisted Targets Sell at Discounts?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 54(3), pages 1371-1401, June.
    • Handle: RePEc:cup:jfinqa:v:54:y:2019:i:03:p:1371-1401_00
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    Cited by:

    1. Meng, Yun & Sutton, Ninon, 2022. "The evolution of bidder gains and acquisition discounts in M&A," Journal of Banking & Finance, Elsevier, vol. 143(C).
    2. Kalcheva, Ivalina & Smith, Janet Kiholm & Smith, Richard L., 2020. "Institutional investment and the changing role of public equity markets: International evidence," Journal of Corporate Finance, Elsevier, vol. 64(C).
    3. Nguyen, Giang & Nguyen, Hai, 2019. "Does seller status matter in inter-corporate asset sales?," Journal of Banking & Finance, Elsevier, vol. 100(C), pages 97-110.
    4. Mason, Paul & Stegemoller, Mike, 2022. "The importance of target information in the acquisition of privately held firms," Journal of Corporate Finance, Elsevier, vol. 77(C).

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