Identifying M&A targets and the information content of VC/PEs

• 作者: Qingquan Tang Wenfei Li
• 来源期刊: 中国会计学刊：英文版
• 学科: 经济
• 年，卷（期）: 2018,（1）
• 页码范围: 33-50
• 页数: 18页
• 分类号: F271

摘要

The information gap in the M&A market hinders acquirers from effectively identifying high-quality targets. We examine whether VC/PEs convey information content in the M&A market and whether acquirers can use such information to identify high-quality targets. We show that VC/PEs have significant information content and can signal high-quality target companies via ‘‘certification'. When acquirers lack acquisition experience and targets are located in inferior information environments, VC/PE ‘‘certification' is more significant.The better reputation a VC/PE has, the more information it conveys. Syndicate VC/PEs convey stronger information than independent VC/PEs. We also find that acquirers do not pay higher premiums for high-quality targets. Overall, our results suggest that VC/PEs have value relevance in the M&A market,confirming their ‘‘certification' role. We present means for acquirers to select high-quality targets and investors to build efficient portfolios.