The Underpricing of Private Targets

42 Pages Posted: 13 Oct 2005 Last revised: 13 Aug 2008

See all articles by John Cooney

John Cooney

Texas Tech University - Rawls College of Business

Thomas Moeller

Texas Christian University - Neeley School of Business

Mike Stegemoller

Baylor University

Abstract

We examine acquisitions of private firms with valuation histories and find a positive relation between acquirer announcement returns and target valuation revisions. Similar to other studies, acquirer announcement returns are positive, on average. However, positive acquirer announcement returns are mainly driven by targets that are acquired for more than their prior valuation. This relation is consistent with pricing effects associated with target valuation uncertainty and behavioral biases in negotiation outcomes.

Keywords: Private acquisitions, Withdrawn IPOs, Underpricing, Valuation uncertainty

JEL Classification: G24, G34

Suggested Citation

Cooney, John W. and Moeller, Thomas and Stegemoller, Michael A., The Underpricing of Private Targets. EFA 2008 Athens Meetings Paper, Available at SSRN: https://ssrn.com/abstract=820164 or http://dx.doi.org/10.2139/ssrn.820164

John W. Cooney

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States
806-834-1536 (Phone)

Thomas Moeller (Contact Author)

Texas Christian University - Neeley School of Business ( email )

TCU Box 298530
Fort Worth, TX 76129
United States
817.257.7457 (Phone)

HOME PAGE: http://www.thomasmoeller.net

Michael A. Stegemoller

Baylor University ( email )

P.O. Box 98004
Waco, TX 76798-8004
United States
254-710-4145 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
453
Abstract Views
2,538
Rank
116,996
PlumX Metrics