Voluntary use of independent valuation advice by target firm boards in takeovers

This study examines why target firm directors commission a voluntary expert to assess offer adequacy in Australian takeovers. The results indicate that expert use is higher where the board is rejecting the offer. In addition, experts are hired where the board faces greater complexity in valuing the consideration offered and the target firm. Expert use is found to be in target shareholders' interest as it increases the likelihood that the bidder will increase the offer price. These findings add to existing evidence on whether target board's act in shareholders' interest during corporate control contests.