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Managers often claim that an important source of value in acquisitions is the acquiring firm's ability to finance investments for the target firm. This claim implies that targets are financially constrained prior to being acquired and that these constraints are eased following the acquisition....
Persistent link: https://www.econbiz.de/10009507042
Background: The wealth effect of limiting shareholder rights via anti-takeover provisions(ATPs) is a contentious issue. By taking the differential effect hypothesis perspective, our study aims to provide additional evidence about the relation between ATPs and acquisition performance. Methods: We...
Persistent link: https://www.econbiz.de/10011541234
U.S. firms are hoarding a $2 trillion cash stockpile which many believe will spur acquisition activity. In light of this fact, we examine whether cash-rich firms actually use their cash when making acquisitions. Surprisingly, we show that firms in the top third of cash holdings are 45% more...
Persistent link: https://www.econbiz.de/10013115073
Acquirers paying with shares exhibit significantly lower announcement returns (Andrade et al. (2001)). Further, cash-rich firms tend to make value-decreasing acquisitions due to possible agency conflicts between managers and owners (Harford (1999)). I investigate the interaction effects of...
Persistent link: https://www.econbiz.de/10013120106
Using a large sample of 2,712 unique U.S. domestic takeovers over the period 1993 to 2014, we show a negative relation between the level of cash holdings and post-announcement corporate bond returns. Our findings support the agency cost of cash holdings view and show that bondholders and...
Persistent link: https://www.econbiz.de/10013006488
The wealth effect of limiting shareholder rights via anti-takeover provisions (ATPs) is a contentious issue. By taking the differential effect hypothesis perspective, our study aims to provide additional evidence about the relation between ATPs and acquisition performance.We examine the...
Persistent link: https://www.econbiz.de/10013008214
The aim of this paper is to study the influence of the Merger and Acquisition (M&A) payment method decision on the acquiring shareholders' M&A valuation, considering the relevance of the acquiring ownership structure and the legal and institutional environment, and the possibility that the...
Persistent link: https://www.econbiz.de/10013079367
We examine the impact on corporate cash holdings of international merger and acquisition (M&A) laws, which facilitate corporate takeovers. We use the staggered enactment of M&A laws from 1992 to 2005 and a sample spanning 34 jurisdictions, and find that levels of corporate cash holdings increase...
Persistent link: https://www.econbiz.de/10014235794
Persistent link: https://www.econbiz.de/10003927253
Using a sample of US noncash acquirers, we find significant evidence of upward earnings management prior to announcing merger and acquisition deals. In this event study, we adopt an industry adjusted leverage proxy. No evidence of premerger earnings management is found in highly leveraged firms....
Persistent link: https://www.econbiz.de/10013098296