Public disclosure in acquisitions |
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| Authors: | Avanidhar Subrahmanyam Wenyuan Xu |
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| Affiliation: | Anderson Graduate School of Management, University of California at Los Angeles, Los Angeles, CA, USA |
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| Abstract: | This paper analyzes firms’ optimal choice of information disclosure before an acquisition. The intuition is that value‐maximizing firms face the following tradeoffs. First, a more precise disclosure reduces risk premia. Second, too precise a disclosure that allows targets to profit increases the price paid for the target in an acquisition. The main conclusion is that firm chooses to disclose either all information or the minimum information required by the regulators, depending on the disclosure requirements, investors’ risk aversion, and the uncertainty embedded in technology shocks. |
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| Keywords: | asymmetric information information disclosure market efficiency |
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