Abstract
Many M&A transactions are framed as mergers of equals when they are really acquisitions. This paper examines the tradeoffs and shareholder implications of this framing in the empirical context of U.S. M&A transactions between 1991 and 2005. By examining the tradeoff between target premium and post-merger control in pseudo mergers of equals, this paper offers new evidence for how merger outcomes are influenced by agency problems. The market reaction to pseudo mergers of equals announcement and post-merger performance are also analyzed. This paper suggests that in pseudo mergers of equals, gains to both target shareholders and acquirer shareholders are lower than gains in transactions accurately announced as acquisitions.