Performance of Mergers and Acquisitions of Public and Private Targets in Emerging Capital Markets

As M&A activity reached its new high in 2015, there is growing research interest in study of M&A processes. The impacts of information asymmetry on returns to acquirers of listed and unlisted targets as well as the determinants of acquirer’s choice between the two alternatives are of particular interest to modern researchers. Results of our study conducted on a sample of deals between 1997 and 2017 by acquirers from BRICS countries suggest that M&A creates value to acquirers in emerging capital markets. We found evidence that capital markets value more acquisitions of private targets than that of public targets both in our event study analysis and regression analysis after controlling for endogeneity bias. Moreover, firms are less likely to acquire private targets if target operates in high-tech industry but are more likely to acquire private targets if they plan to diversify their business. Future research on M&A returns to acquirers of private and public targets may concentrate on factors that are country-specific.