Abstract
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.
Original language | English |
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Pages (from-to) | 210-241 |
Number of pages | 32 |
Journal | Journal of Business Finance and Accounting |
Volume | 41 |
Issue number | 1-2 |
DOIs | |
State | Published - Jan 2014 |
Keywords
- Deal protection
- Go-shop
- Mergers and acquisitions
- No-shop
- Revlon duties