Effective post-signing market check or window dressing? the role of go-shop provisions in m&a transactions

• Autores: Jin Q Jeon, Cheolwoo Lee
• Localización: Journal of Business Finance & Accounting, ISSN-e 1468-5957, Vol. 41, Nº. 1 (issue 1-2), 2014, págs. 210-241
• Idioma: inglés
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• Resumen

  • This paper examines the use of go-shop provisions in M&A. We find that go-shop deals tend to have higher deal premiums and receive more competing bids while the length of the go-shop period does not affect deal premium and competition. Also, deals are less likely to be completed when a go-shop provision is included and when the go-shop length is longer. However, go-shops have no effect on the completion of high premium deals. We also find that the presence of a go-shop provision leads to a positive market reaction to deal announcements. Overall, our findings support the proposition that go-shops reflect the efforts of target managers to fulfill the Revlon duties in the form of a post-signing market check, which is consistent with stewardship theory.