Leverage changes and growth options in mergers and acquisitions
| Autor: | Amir Amel-Zadeh, Elettra Agliardi, Nicos Koussis |
|---|---|
| Přispěvatelé: | Agliardi, Elettra, Amel-Zadeh, Amir, Koussis, Nicos |
| Rok vydání: | 2016 |
| Předmět: |
Economics and Econometrics
050208 finance Exploit Capital structure media_common.quotation_subject 05 social sciences Equity (finance) growth option Context (language use) dynamic trade-off model Monetary economics mergers and acquisition Leverage (negotiation) Debt 0502 economics and business Mergers and acquisitions Business 050207 economics Volatility (finance) Finance media_common |
| Zdroj: | Journal of Empirical Finance. 37:37-58 |
| ISSN: | 0927-5398 |
| DOI: | 10.1016/j.jempfin.2016.02.004 |
| Popis: | We develop and empirically test a trade-off model for the analysis of leverage changes in mergers and acquisitions. Our study extends prior findings of a post-merger increase in leverage for the acquiring firm, by linking this leverage increase to merging firms that are less correlated, create significantly larger growth options, and have lower bankruptcy costs and lower volatility. Specifically, we show that acquiring firms are more likely to finance diversifying acquisitions with debt as equity holders exploit the increased debt capacity with higher leverage resulting in total merger gains that are positively associated with financial synergies. We also provide evidence of a U-shaped relationship between growth options and leverage changes theoretically and empirically in the context of mergers. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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