Professor of Finance
Loyola Marymount University
This paper enables a detailed look inside the “black box” of merger and acquisition (M&A) negotiations before the first public bid is announced. We find that bid revisions are very common in the pre-public phase of a deal, and that price revisions during the private negotiation window are associated with changes in the public-market values of the acquisition target. We further find that target firms’ earnings releases during the private negotiation process have a significant impact on bid revisions. We also investigate whether the nature of the bid process has an impact on pre-public takeover price revisions and examine the strategic difference in bidding in deals that are initiated privately by a bidder other than the winning bidder. We interpret our results as consistent with the notion that the behavior of target managers in the private negotiation window appears congruent with shareholder wealth maximization.
***M.Sc. Students in Management, this event can count towards one of the six mandatory Research Seminars Series needed to attend (MGT6991).***
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Micah Officer is a Professor of Finance at Loyola Marymount University in Los Angeles. His research focuses on corporate finance and corporate governance issues, including mergers and acquisitions, dividend policy, corporate governance, bankruptcy, initial public offerings, and directors’ and officers’ liability insurance. Micah has published numerous articles in top-tier finance journals, such as the Journal of Financial Economics, Journal of Finance, Journal of Business, and Journal of Corporate Finance, and regularly gives presentations at universities and conferences around the world. Micah is an Associate Editor of the Journal of Financial Economics.