Returns to Swedish Acquirers from Public an Private M&As

Abstract: This paper examines Swedish listed acquirers’ cumulative abnormal returns surrounding the announcement of acquisitions between the period 1998–2018 of both public and private targets. We find that acquirers earn an average cumulative abnormal return of 0.68% when the target is public and an average cumulative abnormal return of 1.99% when the target is private. The difference in average abnormal returns stays persistent after controlling for the variables: method of payment, acquirer’s market capitalization, relative size between the acquirer and the target, whether or not the acquirer and the target functions in the same industry, as well as if the transaction was cross-border, Tobin’s Q, pre-announcement leakage of information, deal size, and competing bids. The findings in this paper also show that all-stock payment is preferred when the target is private and all-cash payment is preferred when the target is public.