M&A rumors about unlisted firms

Yan Alperovych, Douglas Cumming, Veronika Czellar, Alexander Groh

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We examine 68,044 completed or abandoned M&A transactions involving unlisted targets to determine the effect of transaction rumors on deal-closing propensity and transaction values. Estimation is challenging because rumors may be spread on purpose or emerge accidentally while transaction values are only observable for completed deals and no regulation requires to disclose them. We use indirect inference to overcome these challenges. We find that (a) M&A rumors are deal breakers, (b) rumored but closed deals have higher transaction values, and (c) the combined economic impact of (a) and (b) is negative: in expectation rumors destroy about 32% of transaction value.
Original languageEnglish
Pages (from-to)1324-1339
JournalJournal of Financial Economics
Issue number3
Early online date11 May 2021
Publication statusE-pub ahead of print - 11 May 2021


  • Acquisitions
  • Indirect inference
  • Mergers
  • Rumors
  • Unlisted firms

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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