Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/187659
Authors: 
Tang, Qingquan
Li, Wenfei
Year of Publication: 
2018
Citation: 
[Journal:] China Journal of Accounting Research [ISSN:] 1755-3091 [Volume:] 11 [Year:] 2018 [Issue:] 1 [Pages:] 33-50
Abstract: 
The information gap in the M&A market hinders acquirers from effectively identifying high-quality targets. We examine whether VC/PEs convey information content in the M&A market and whether acquirers can use such information to identify high-quality targets. We show that VC/PEs have significant information content and can signal high-quality target companies via "certification". When acquirers lack acquisition experience and targets are located in inferior information environments, VC/PE "certification" is more significant. The better reputation a VC/PE has, the more information it conveys. Syndicate VC/PEs convey stronger information than independent VC/PEs. We also find that acquirers do not pay higher premiums for high-quality targets. Overall, our results suggest that VC/PEs have value relevance in the M&A market, confirming their "certification" role. We present means for acquirers to select high-quality targets and investors to build efficient portfolios.
Subjects: 
M&A
Certification
VC/PEs
Information content
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/
Document Type: 
Article
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