Adverse Selection in Acquisitions of Small Manufacturing Firms: A Comparison of Private and Public Targets

Adverse Selection in Acquisitions of Small Manufacturing Firms: A Comparison of Private and... This study investigates acquisitions of small manufacturing firms and compares private and public targets. We develop the argument that private targets tend to involve higher transaction costs in the presence of adverse selection problems than their public counterparts. Consistent with predictions, the empirical evidence indicates that bidders choose to acquire public rather than private targets when acquiring young firms and when engaging in inter-industry transactions. Acquirers also tend to avoid private targets that have significant intangible assets and have not signaled the value of these resources through other means such as collaborative agreements. The results shed light on the benefits of being public and the decision-making criteria employed by acquiring organizations. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Adverse Selection in Acquisitions of Small Manufacturing Firms: A Comparison of Private and Public Targets

Loading next page...
 
/lp/springer_journal/adverse-selection-in-acquisitions-of-small-manufacturing-firms-a-XtaYa4D3EI
Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2005 by Springer
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-005-5332-y
Publisher site
See Article on Publisher Site

Abstract

This study investigates acquisitions of small manufacturing firms and compares private and public targets. We develop the argument that private targets tend to involve higher transaction costs in the presence of adverse selection problems than their public counterparts. Consistent with predictions, the empirical evidence indicates that bidders choose to acquire public rather than private targets when acquiring young firms and when engaging in inter-industry transactions. Acquirers also tend to avoid private targets that have significant intangible assets and have not signaled the value of these resources through other means such as collaborative agreements. The results shed light on the benefits of being public and the decision-making criteria employed by acquiring organizations.

Journal

Small Business EconomicsSpringer Journals

Published: Apr 20, 2005

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve Freelancer

DeepDyve Pro

Price
FREE
$49/month

$360/year
Save searches from
Google Scholar,
PubMed
Create lists to
organize your research
Export lists, citations
Read DeepDyve articles
Abstract access only
Unlimited access to over
18 million full-text articles
Print
20 pages/month
PDF Discount
20% off