01439nam a22001097a 4500008004100000022001400041245015600055260003700211300001800248440005500266520100800321190312b        xxu||||| |||| 00| 0 eng d  a0304-405X  aAre stock-financed takeovers opportunistic? / by B. Espen Eckbo, Tanakorn Makaew, Karin S. ThorburncB. Espen Eckbo, Tanakorn Makaew, Karin S. Thorburn  aAmsterdambElsevier c June 2018  aPages 443-465  aJournal of Financial Economicsv128 (3)x0304-405X  aAbstract
The more the target knows about the bidder, the more difficult is paying the target with overpriced bidder shares. Thus, when bidders are opportunistic, the fraction of stock in the deal payment will be lower for better informed targets. We test this intuitive prediction against the alternative that stock payments primarily reflect bidder concerns with target adverse selection, which implies a greater fraction of stock in the deal payment for better informed targets. Discriminating between these two mutually exclusive and nested predictions requires measures of target information about the bidder but not of market mispricing. We find that public bidders systematically use more stock in the payment when the target knows more about the bidder. Tests exploiting exogenous variation in bidder market-to-book ratios also fail to support bidder opportunism. Finally, greater potential competition from private bidders is associated with greater propensity for public bidders to pay in cash.