The price of patents, liquidity, and information: Evidence from acquisitions of unlisted European high-tech targets

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi Saari, Antti 2011-11-14T11:23:36Z 2011-11-14T11:23:36Z 2010
dc.description.abstract This thesis explores the acquisition discounts of unlisted targets reported in US takeovers with a European high-tech focused dataset, and a specific view on the determinants of that discount. More specifically, I study the interrelatedness of patents, target shareholders’ demand for liquidity, and the information asymmetry as explanatory measures of the acquisition discount. To provide a more thorough view of the role of patents, liquidity, and information asymmetry in acquisitions, I also study the determinants of the target having patented its innovations prior to the acquisition announcement, and those of the acquirer abnormal announcement return. In the former, I proceed with a specific focus on dimensions of information asymmetry as reasons for a target having patents. In the latter, my focus is similar to the study of the acquisition discounts. On the one hand, my results should provide validation for those found in the US, and on the other, a more thorough understanding of the listing effect, and the role of patents, liquidity, and information asymmetry in acquisitions of unlisted high-tech targets. I employ a unique combination of data related to acquisitions of European targets. First, I obtain deal data, and data related to M&A and IPO volumes, as well as valuation multiples related to the target from the Thomson-Reuters SDC Platinum database. Then, I merge that data with acquirer price and financials data from Datastream, as well as target patent data from the European Patent Office free databases. I end up with multiples data for 1538 deals, and acquirer return data for 637 deals. To facilitate valid hypothesis tests, the acquisition discount data are transformed from the left skewed economic discount to a normally distributed transformed discount using the square root transformation. Moreover, the MacKinnon-White (1985) covariance matrix is employed to account for heteroskedasticity in finite samples. In the announcement return model, I employ the wild bootstrap to account for heteroskedasticity and leptokurtosis in the dependent variable. Finally, while the selection model is logit, the model is resampled utilizing the jackknife procedure to increase the validity of the hypothesis tests and mitigate potential overrejection of the null hypotheses. My results are consistent with the majority of my hypotheses. In fact, only the hypothesis that the mere existence of patents decrease acquisition discounts is not supported by the data. My findings are consistent with the notion that the acquisition discount is in part caused by decreased availability of liquidity to target shareholders. Moreover, my results support the notion that any means of mitigating information asymmetry is valuable to both the acquirer and the target. Finally, I find that acquirers are rational in trying to mitigate the information asymmetry in one dimension while it increases in another. en
dc.format.extent 90
dc.language.iso en en
dc.title The price of patents, liquidity, and information: Evidence from acquisitions of unlisted European high-tech targets en
dc.type G2 Pro gradu, diplomityö fi Kauppakorkeakoulu fi School of Economics en
dc.contributor.department Department of Accounting and Finance en
dc.contributor.department Laskentatoimen ja rahoituksen laitos fi
dc.subject.keyword M&A
dc.subject.keyword acquisition
dc.subject.keyword takeover
dc.subject.keyword liquidity
dc.subject.keyword patents
dc.subject.keyword information asymmetry
dc.subject.keyword high-tech
dc.subject.keyword CAR
dc.subject.keyword listing effect
dc.subject.keyword yritysostot
dc.subject.keyword likviditeetti
dc.subject.keyword patentit
dc.subject.keyword informaatioepäsymmetria
dc.subject.keyword korkea teknologia
dc.subject.keyword hankkijan tuotto
dc.subject.keyword listausvaikutus
dc.identifier.urn URN:NBN:fi:aalto-201111181418
dc.type.dcmitype text en
dc.programme.major Finance en
dc.programme.major Rahoitus fi
dc.type.ontasot Master's thesis en
dc.type.ontasot Pro gradu tutkielma fi
dc.subject.helecon rahoitus
dc.subject.helecon financing
dc.subject.helecon yrityskaupat
dc.subject.helecon corporate acquisitions
dc.subject.helecon likviditeetti
dc.subject.helecon liquidity
dc.subject.helecon patents
dc.subject.helecon patentit
dc.subject.helecon teknologia
dc.subject.helecon technology
dc.subject.helecon tuotto
dc.subject.helecon rate of return
dc.ethesisid 12374 2010-09-08
dc.location P1 I

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