TY  - JOUR
AU  - Bargeron,Leonce
AU  - Schlingemann,Frederik
AU  - Stulz,Rene M.
AU  - Zutter,Chad
TI  - Why Do Private Acquirers Pay So Little Compared to Public Acquirers?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13061
PY  - 2007
Y2  - April 2007
UR  - http://www.nber.org/papers/w13061
L1  - http://www.nber.org/papers/w13061.pdf
N1  - Author contact info:
Leonce Bargeron
Katz Graduate School of Business
University of Pittsburgh
372 Mervis Hall
Pittsburgh, PA 15260
E-Mail: llbargeron@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

Chad Zutter
Katz Graduate School of Business
University of Pittsburgh
372 Mervis Hall
Pittsburgh, PA 15260
E-Mail: czutter@pitt.edu
AB  - We find that the announcement gain to target shareholders from acquisitions is significantly lower if a private firm instead of a public firm makes the acquisition. Non-operating firms like private equity funds make the majority of private bidder acquisitions. On average, target shareholders receive 55% more if a public firm instead of a private equity fund makes the acquisition. There is no evidence that the difference in premiums is driven by observable differences in targets. We find that target shareholder gains depend critically on the managerial ownership of the bidder. In particular, there is no difference in target shareholder gains between acquisitions made by public bidders with high managerial ownership and by private bidders. Such evidence suggests that the differences in managerial incentives between private and public firms have an important impact on target shareholder gains from acquisitions and managers of firms with diffuse ownership may pay too much for acquisitions.
ER  -