This paper examines the returns of asset acquirers when sellers have different statuses. We find that private sellers create lower returns for acquirers and receive higher premiums than public sellers. Both private equity and private operating sellers generate lower returns for acquirers than public sellers, but their relative gain differences are not significantly different. In addition, the gain difference cannot be explained by acquirer characteristics, sample selection effects, or means of payments, but it increases with sellers’ director ownership. We examine alternative theories to explain our results. While we do not find supportive evidence for the synergy creation and information symmetry hypothesis, we find ample evidence for the manager discretion hypothesis.
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