TY  - JOUR
AU  - Moeller,Sara B.
AU  - Schlingemann,Frederik P.
AU  - Stulz,Rene M.
TI  - Do Acquirers With More Uncertain Growth Prospects Gain Less From Acquisitions?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10773
PY  - 2004
Y2  - September 2004
UR  - http://www.nber.org/papers/w10773
L1  - http://www.nber.org/papers/w10773.pdf
N1  - Author contact info:
Sara B. Moeller
Katz Graduate School of Business
University of Pittsburgh
360 Mervis Hall
Pittsburgh, PA 15260
E-Mail: sbmoeller@katz.pitt.edu

Frederik P. Schlingemann
Katz Graduate School of Business
University of Pittsburgh
372 Mervis Hall
Pittsburgh, PA 15260
E-Mail: schlinge@katz.pitt.edu

Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
AB  - Behavioral finance models imply that an increase in shares outstanding leads to a lower stock price for firms with greater diversity in opinion among investors. Information asymmetry models imply that share issues by firms with greater information asymmetries are accompanied by larger share price decreases. Valuation models predict a negative relation between uncertainty resolution and share prices. Acquisition announcements are used to investigate these predictions. We find acquirer abnormal returns for acquisitions of public firms paid for with equity (but not for acquisitions of private firms paid for with equity) are lower for firms with higher dispersion of analyst forecasts, larger change in dispersion of analyst forecasts, and higher idiosyncratic volatility. The opposite result holds for acquisitions of public firms paid for with cash for idiosyncratic volatility. We show that this evidence can best be explained by models that emphasize information asymmetries, but the behavioral models and valuation models explain part of the evidence.
ER  -