Initial Offer Precision and M&A Outcomes

Research output: Contribution to journalArticleScientificpeer-review

Researchers

Research units

  • Boston Consulting Group's Boston Office in Boston

Abstract

Building on recent research in social psychology, this paper analyzes the link between the precision of initial cash offers and mergers and acquisition (M&A) outcomes. About one-half of the offers are made at the precision of one or five dollars per share, while an additional one-third are made at the precision of a half dollar or one quarter. The practice of making offers at round price-per-share levels is associated with a higher purchase price for target shares and a lower probability of deal completion.

Details

Original languageEnglish
Pages (from-to)291-310
JournalFinancial Management
Volume48
Issue number1
Early online date10 Jul 2018
Publication statusPublished - 2019
MoE publication typeA1 Journal article-refereed

ID: 27001221