This study examines whether the disclosure of private target firms' financial statements disciplines acquiring firms' managers to make better acquisition-investment decisions. The SEC requires public acquiring firms to disclose audited financial statements of targets that meet certain disclosure thresholds. Using hand-collected data, I first document that private targets' financial statements provide value relevant information to market participants. Next, consistent with my predictions, I find that the disclosure of private targets' financial statements is associated with higher acquirer announcement returns, better post-acquisition performance, and lower likelihood of post-acquisition divestitures. Finally, I find the disciplining effect of this disclosure requirement is more pronounced when monitoring by outside capital providers is more costly. In sum, the evidence suggests that the disclosure of private targets' accounting information is informative to market participants, disciplines managers' acquisition decisions, and improves acquisition efficiency.
| Identifer | oai:union.ndltd.org:uiowa.edu/oai:ir.uiowa.edu:etd-5616 |
| Date | 01 May 2015 |
| Creators | Chen, Ciao-Wei |
| Contributors | Collins, Daniel W., Mergenthaler, Richard D. |
| Publisher | University of Iowa |
| Source Sets | University of Iowa |
| Language | English |
| Detected Language | English |
| Type | dissertation |
| Format | application/pdf |
| Source | Theses and Dissertations |
| Rights | Copyright 2015 Ciao-Wei Chen |
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