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Do Financially “Healthy” Bidders Make Better Acquisitions?

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Do Financially “Healthy” Bidders Make Better Acquisitions?

Lu, Yanchen (2014) Do Financially “Healthy” Bidders Make Better Acquisitions? Masters thesis, Concordia University.

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Abstract

Mergers and acquisitions (M&A) activities have been common research topics for decades, and there are numerous methods being developed to analyze the financial status or predict the performance of a company. In this thesis, companies are classified into two groups, as “healthy” and “unhealthy” bidders based on the financial leverage ratio and interest coverage ratio. I compared the performance of the “healthy” bidders group and the “unhealthy” bidders group over both the 60-trading day short and 42-month long term. The empirical results indicate that shareholders of “healthy” bidders gain from the takeover decision in general, while the shareholders of “unhealthy” bidders lose. In addition, a significant relationship is observed between the bidders’ financial health and their announcement abnormal returns, with “healthy” bidder shareholders achieving higher abnormal returns.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Thesis (Masters)
Authors:Lu, Yanchen
Institution:Concordia University
Degree Name:M. Sc.
Program:Administration (Finance option)
Date:11 November 2014
Thesis Supervisor(s):Betton, Sandra
ID Code:979576
Deposited By: YANCHEN LU
Deposited On:13 Jul 2015 18:33
Last Modified:18 Jan 2018 17:49
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