Why Do Private Acquirers Outperform Public Acquirers?

Why Do Private Acquirers Outperform Public Acquirers?

Andrey Golubov, Nan Xiong

Series number :

Serial Number: 
482/2016

Date posted :

November 17 2016

Last revised :

November 09 2017
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Keywords

  • Private Firms • 
  • mergers and acquisitions • 
  • efficiency gains • 
  • agency conflicts

We provide the first evidence on the performance of private operating firms as acquirers. Private bidders experience greater post-acquisition operating performance improvements compared to public bidders.

This effect is not due to differences in target types, merger accounting, financing constraints, private equity ownership or subsequent listing of some private bidders, and is robust to instrumentation. Further analysis of governance arrangements at least partially attributes the private bidder effect to lower agency costs in private firms. Not only do private firms pay lower prices for target firm assets, they also operate them more efficiently by containing overhead costs and capital expenditure.

Authors

Real name: 
Andrey Golubov
Professor
Real name:
Nan Xiong
SAIF, Shanghai Jiao Tong University