Professor Michael Guo jie.guo@durham.ac.uk
Professor
Social Connections, Reference Point and Acquisition Premium
Guo, M.; Li, X.; Seeger, N.C.; Vagenas-Nanos, V.
Authors
X. Li
N.C. Seeger
V. Vagenas-Nanos
Abstract
This paper examines the impact of acquirer-target social connections along with the target 52-week high (Baker et al., 2012) on acquisition premiums. We show that acquisition premium is more sensitive to first-degree connection than the reference point, suggesting that information is the main driving force for determining acquisition premiums. The findings also indicate that connected directors are more likely to favour firms where they hold higher positions and negotiate favourable premiums. Acquirers pay lower premiums when target directors are retained in the new entity. Connected acquirers are also more likely to finance their deals with equity. Overall, this paper provides support to the information flow hypothesis that acquirers with social connections have better access to target information and enhanced bargaining power in negotiations.
Citation
Guo, M., Li, X., Seeger, N., & Vagenas-Nanos, V. (2019). Social Connections, Reference Point and Acquisition Premium. The British Accounting Review, 51(1), 46-71. https://doi.org/10.1016/j.bar.2018.07.001
Journal Article Type | Article |
---|---|
Acceptance Date | Jul 20, 2018 |
Online Publication Date | Jul 25, 2018 |
Publication Date | Jan 31, 2019 |
Deposit Date | Jul 7, 2018 |
Publicly Available Date | Mar 29, 2024 |
Journal | British Accounting Review |
Print ISSN | 0890-8389 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 51 |
Issue | 1 |
Pages | 46-71 |
DOI | https://doi.org/10.1016/j.bar.2018.07.001 |
Public URL | https://durham-repository.worktribe.com/output/1326736 |
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Publisher Licence URL
http://creativecommons.org/licenses/by-nc-nd/4.0/
Copyright Statement
© 2018 This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
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