An analysis of the implications of uncertainty and agency problems on the wealth effects to acquirers of private firms

The IPO market as a screening device and the going public decision: evidence from acquisitions of privately and publicly held firms

“…A similar argument is used by Mantecon (2008) to explain the difference in excess returns between buyers of private and public target. Acquirers experience small and statistically insignificant returns when the target is a public corporation, but gain in the acquisition of private targets, a result that was termed as the "listing effect" by Faccio, McConnell and Stolin (2006).…”

“…This model suggest that private markets for control rights are less than perfectly competitive and owners are able to extract the buyer's full reservation price by selling cash-flow rights in competitive markets. Mantecon (2008) also argues that private markets for control are less than perfectly competitive. He (2008) finds empirical evidence that suggest that the cost to obtain information on private targets acts as a barrier to entry and reduces the pool of potential buyers.…”

Mitigating risks in cross-border acquisitions

“…10 Mantecon (2008) argues that the gains to acquirers of private firms may be explained by the higher cost to obtain information about these firms. This effect could explain the results in this study because the JVs were not publicly traded.…”

An analysis of the liquidity benefits provided by secondary markets

“…We lack specific information about this component, but owners should invest more of their own personal wealth (accepting high levels of idiosyncratic risk) to fund a firm's growth when their firms have restricted access to alternative sources of financing. We expect that owners are forced to invest more of their wealth in firms with higher levels of valuation uncertainty because these firms suffer from more severe adverse selection problems, which increase their cost of capital and hamper their access to external financing (Diamond and Verrecchia, 1991;Mantecon, 2008). We also expect CEOs to have greater investment in their firms when they are also the founders and we included the variable CEO Is the Founder, which equals 1 when the CEO is the founder or cofounder.…”