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Asymmetric Information and Target Firm Returns

Croci, Ettore; Petmezas, Dimitris; Travlos, Nickolaos


Ettore Croci

Nickolaos Travlos


This article examines the relationship between asymmetric information and target firm returns in mergers and acquisitions (M&As). We argue that if managers possess favourable (unfavourable) asymmetric information, they will offer, ceteris paribus, a high (low) premium, affecting target firm returns accordingly. We propose several proxies of asymmetric information. The empirical evidence strongly supports our hypothesis as we find that target firm returns are significantly negatively related to asymmetric information regarding synergy gains. Our results are robust after controlling for several target and deal characteristics.


Croci, E., Petmezas, D., & Travlos, N. (2012). Asymmetric Information and Target Firm Returns. European Journal of Finance, 18(7), 639-661.

Journal Article Type Article
Acceptance Date Jun 20, 2011
Online Publication Date Sep 19, 2011
Publication Date 2012
Deposit Date Aug 2, 2020
Journal European Journal of Finance
Print ISSN 1351-847X
Electronic ISSN 1466-4364
Publisher Taylor and Francis Group
Peer Reviewed Peer Reviewed
Volume 18
Issue 7
Pages 639-661
Public URL