Seminario académico de Finanzas y Contabilidad

Fecha: 15 de enero, 13:00 horas, sala P 307, Facultad de Economía y Negocios.

Seminario académico de Finanzas y Contabilidad

Título: “What Drives Acquisition Premiums and Why do Targets Reject Offers? Evidence from Failed Acquisition Offers”

Expone: Omri Even-Tov, profesor asistente de la Escuela de Negocios Haas, Universidad de California Berkeley.


Using a unique hand-collected sample of 1,195 failed acquisition offers from 1979 to 2012, we investigate whether acquisition premiums are driven by the market’s revaluation of the target (the information hypothesis) or potential synergies (the synergy hypothesis). To address this question, we partition the sample into acquisition offers that fail due to the target’s rejection (rejection group) and those that fail due to other reasons (non-rejection group). We find that the information hypothesis applies to both groups, reversing the interpretation of prior studies. Focusing on the rejection group, we further investigate the effect of various corporate governance measures in promoting either managerial incentive alignment or rent extraction. We focus on the rejection group given the high likelihood that within this group the CEO plays a key role in the rejection decision. We find that the existence of a poison pill provision exacerbates managerial rent extraction. In contrast, we find that the existence of a staggered board does not promote rent extraction and that higher levels of CEO option ownership enhance incentive alignment. Overall, our paper shows that identifying the failure reason is of prominent importance for research in mergers and acquisitions.