2019

Initial Offer Precision and M&A Outcomes

Reprint No. 2019:64

Author(s): Petri Hukkanen and Matti KeloharjuYear: 2019 Title: Financial Management Volume (No.): 48 (1) Pages: 291–310
Online article (restrictions may apply)


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.


Reference:
Hukkanen, Petri and Matti Keloharju (2019), "Initial Offer Precision and M&A Outcomes". Financial Management 48(1), 291–310.

Matti Keloharju

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matti.keloharju@aalto.fi

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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