Open AccessAsymmetric Information And Acquisition Of Closely Held Firms
Author(s) -
Anna Dodonova
Publication year - 2011
Publication title -
the international business and economic research journal/the international business and economics research journal
Language(s) - English
Resource type - Journals
eISSN - 2157-9393
pISSN - 1535-0754
DOI - 10.19030/iber.v6i4.3362
Subject(s) - negotiation , information asymmetry , shareholder , business , stock price , stock (firearms) , industrial organization , tender offer , process (computing) , monetary economics , microeconomics , finance , economics , corporate governance , computer science , engineering , mechanical engineering , paleontology , series (stratigraphy) , political science , law , biology , operating system
This paper analyzes the problem of asymmetric information in the process of acquisition of closely held firms. It shows that the changes in the acquirer stock price during the takeover negotiation allow the acquire firm to receive additional information about the target. The paper predicts that the asymmetric information problem is less severe when the major shareholder of the target firm is wealthier, the ownership of the target firm is less concentrated, or both.