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Managerial Motives in Mergers: Propensity Score Matching Approach
Author(s) -
Svetina Marko
Publication year - 2012
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2565
Subject(s) - propensity score matching , bidding , equity (law) , matching (statistics) , sample (material) , business , mergers and acquisitions , private equity , contrast (vision) , private equity firm , marketing , microeconomics , finance , economics , accounting , monetary economics , law , statistics , chemistry , mathematics , chromatography , artificial intelligence , political science , computer science
Recent research finds that managers of public firms overpay for acquisitions relative to private equity acquirers and that the public acquirer ulterior motives explain the apparent overpayment. I find that, in sharp contrast to the existing literature, the difference in what public firm managers are willing to pay for their targets can be attributed to efficiency motives (using the propensity score matching to remove a significant amount of bias from the sample allows for cleaner comparisons). Additional support for these results is found by examining transactions in which both public and private equity firms are bidding on the same target. Copyright © 2012 John Wiley & Sons, Ltd.