Acquisition of Listed vs Unlisted Firms: Determinants in Different Legal and Institutional Environments

Abstract

Acquiring firm shareholders place greater value on the purchase of unlisted firms (2.71%) than listed ones (0.59%) for Mergers and Acquisitions (M&As) performed by European listed firms from 2002 to 2007. Managerial opportunism is a determinant in the acquisition of listed firms, occurring with greater probability in countries in which acquiring firm shareholders receive less protection. Another determinant is information asymmetry, which favors a discount in the price of acquisitions of unlisted firms. In line with this result, the less developed the capital market in the country of the acquired firm, the greater the probability of acquisitions of listed firms.