Facoltà di scienze economiche

Strategic M&A announcement timing, information asymmetry and behavioral biases

Filipovic, Zoran ; Degeorge, François (Dir.)

Thèse de doctorat : Università della Svizzera italiana, 2018 ; 2018ECO012.

Mergers and acquisitions (M&As) are among the largest and most important corporate events. Companies acquire other companies for a variety of reasons. The most quoted one is without any doubt the potential additional value from combining two firms, better known as synergy, while the most obscure and the most controversial one is probably the elimination of future competition. No matter what... Plus

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    Summary
    Mergers and acquisitions (M&As) are among the largest and most important corporate events. Companies acquire other companies for a variety of reasons. The most quoted one is without any doubt the potential additional value from combining two firms, better known as synergy, while the most obscure and the most controversial one is probably the elimination of future competition. No matter what the main motive is, measuring M&A future benefits is not an easy task and is probably more art than exact science. To get a bottom line number, apart from future cash flows, investors also need to assess a number of qualitative aspects of a deal, such as the compatibility of corporate cultures of the transaction parties, managers’ skill in M&A execution etc. With all these uncertainty levels piled up, information asymmetry makes it even harder for managers to clearly communicate the real value of a deal. What they do in such a situation and how investors respond is not obvious. In my thesis, I advocate that managers indeed put effort to overcome the issue of how to convey deal quality. Specifically, I investigate the following scenarios: managers select the best time to announce a deal and/or they effectively disclose deal quality in the announcement press releases. The first alternative is also known as strategic announcement timing.