Evaluation of IPO-firm takeovers: an event study

Evaluation of IPO-firm takeovers: an event study The acquisition of innovative and entrepreneurial firms has become an important issue in gaining competition advantages. While there exists a fruitful and promising literature analyzing M&A activities in general, there is only limited evidence available on the acquisitions of high-tech start-ups and entrepreneurial firms by larger incumbents. This study addresses this issue and focuses on acquisitions targeted at public IPO firms. Our main interest is whether and how the stock market evaluates the specific human capital of the CEO and founder of the entrepreneurial target firm. While in general target firms assets are positively evaluated by market participants, this should not necessarily hold for assets owned by the founder of the target firm. The findings clearly show that stock market participants positively evaluate target firms intangible assets, as measured by patents. But that also the opposite holds if the assets are under control of the founder CEO. Our results thus strongly support conclusions derived from property rights or incomplete contract theory on joined ownership of assets and performance. We conclude that the acquirer’s post-acquisition performance strongly depends on the continued access to the targets’ specific intangible assets, which is not necessarily the case for the founder’s specific human capital. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Evaluation of IPO-firm takeovers: an event study

Loading next page...
 
/lp/springer_journal/evaluation-of-ipo-firm-takeovers-an-event-study-FymK7JPFCa
Publisher
Springer Journals
Copyright
Copyright © 2016 by Springer Science+Business Media New York
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-016-9740-y
Publisher site
See Article on Publisher Site

Abstract

The acquisition of innovative and entrepreneurial firms has become an important issue in gaining competition advantages. While there exists a fruitful and promising literature analyzing M&A activities in general, there is only limited evidence available on the acquisitions of high-tech start-ups and entrepreneurial firms by larger incumbents. This study addresses this issue and focuses on acquisitions targeted at public IPO firms. Our main interest is whether and how the stock market evaluates the specific human capital of the CEO and founder of the entrepreneurial target firm. While in general target firms assets are positively evaluated by market participants, this should not necessarily hold for assets owned by the founder of the target firm. The findings clearly show that stock market participants positively evaluate target firms intangible assets, as measured by patents. But that also the opposite holds if the assets are under control of the founder CEO. Our results thus strongly support conclusions derived from property rights or incomplete contract theory on joined ownership of assets and performance. We conclude that the acquirer’s post-acquisition performance strongly depends on the continued access to the targets’ specific intangible assets, which is not necessarily the case for the founder’s specific human capital.

Journal

Small Business EconomicsSpringer Journals

Published: May 10, 2016

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 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

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