Zhou, Linyi (2016) Mergers and Acquisitions Deal Initiation and Motivation. Masters thesis, Concordia University.
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Abstract
This study examines potential motivations for firms to initiate a merger or acquisition, and investigates the relation between the deal initiator and firm performance, premiums, payment method, and time to completion. Using a sample of U.S. mergers and acquisitions from 2006 – 2012, we find that both target cumulative abnormal returns (CARs) around the announcement date and takeover premiums are significantly lower in target-initiated deals than in bidder-initiated deals (confirming findings of Masulis and Simsir, 2015). Moreover, we find that target-initiated deals utilize more cash as a means of payment (perhaps a byproduct of targets approaching cash-rich bidders), have a shorter time to deal completion, and provide higher long-term buy-and-hold abnormal returns (BHAR) to acquiring firms. Lastly, we show that target firms in target-initiated deals are more financially distressed, providing motivation for such targets to initiate the deal, hurry it along, and accept the lower returns offered.
| Divisions: | Concordia University > John Molson School of Business > Finance |
|---|---|
| Item Type: | Thesis (Masters) |
| Authors: | Zhou, Linyi |
| Institution: | Concordia University |
| Degree Name: | M. Sc. |
| Program: | Administration (Finance option) |
| Date: | 27 January 2016 |
| Thesis Supervisor(s): | Davis, Frederick and Walker, Thomas |
| Keywords: | Deal initiation, Mergers and acquisitions, Financial distress |
| ID Code: | 980864 |
| Deposited By: | LINYI ZHOU |
| Deposited On: | 17 Jun 2016 14:37 |
| Last Modified: | 18 Jan 2018 17:52 |
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