TY  - JOUR
AB  - Purpose This paper aims to examine empirically the role of toeholds in reducing asymmetric information in mergers and acquisitions by establishing a relationship between the toehold and some relevant characteristics of the acquiring and the target firm.Design/methodology/approach A regression analysis is conducted to examine the relation between the dependent variable (the toehold) and a set of independent variables. A multinomial logit model is used to test for the occurrence of toeholds. A probit selection model and two-step Heckman correction tests are used to correct the data and to check for robustness of the results.Findings The regression results for acquisitions with prior toeholds are consistent with the studied hypotheses that asymmetric information is more observed in foreign acquisitions, in different industries, with tender offers and with higher levels of intangible assets. A negative relationship is found between toehold size and the number of competing bidders.Originality/value Consistent with previous literature, the study finds that majority of bidders abstain from purchasing a toehold before entering a bid contest. The study also emphasizes the role of intangible assets in assessing the efficacy of toeholds under asymmetric information. The ratio of target intangible assets to target total serves as a proxy for asymmetric information. Regression results are consistent with the hypotheses that asymmetry of information is observed when the acquiring and the target firm operate in different countries and industries.
VL  - 34
IS  - 2
SN  - 1086-7376
DO  - 10.1108/SEF-04-2015-0113
UR  - https://doi.org/10.1108/SEF-04-2015-0113
AU  - Aintablian Sebouh
AU  - El Khoury Wissam
AU  - M’Chirgui Zouhaier
PY  - 2017
Y1  - 2017/01/01
TI  - The role of toeholds on asymmetric information in mergers and acquisitions
T2  - Studies in Economics and Finance
PB  - Emerald Publishing Limited
SP  - 260
EP  - 280
Y2  - 2024/09/19
ER  -