Inefficiencies and externalities from opportunistic acquirers

• 成果类型: Article
• 署名作者: Li, Di; Taylor, Lucian A.; Wang, Wenyu
• 署名单位: Peking University Shenzhen Graduate School (PKU Shenzhen); Peking University; University of Pennsylvania; Indiana University System; Indiana University Bloomington
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2018.07.005
• 发表日期: 2018
• 页码: 265-290
• 关键词: Mergers and acquisitions; structural estimation; Misvaluation; INEFFICIENCY; Externality

摘要

If opportunistic acquirers can buy targets using overvalued shares, then there is an inefficiency in the merger and acquisition (M&A) market: the most overvalued rather than the highest-synergy bidder may buy the target. We quantify this inefficiency using a structural estimation approach. We find that the M&A market allocates resources efficiently on average. Opportunistic bidders crowd out high-synergy bidders in only 7% of transactions, resulting in an average synergy loss equal to 9% of the target's value in these inefficient deals. The implied average loss across all deals is 0.63%. Although the inefficiency is small on average, it is large for certain deals, and it is larger when misvaluation is more likely. Even when opportunistic bidders lose the contest, they drive up prices, imposing a large negative externality on the winning synergistic bidders. (C) 2018 Elsevier B.V. All rights reserved.