Název: M&A activity and the capital structure of target firms
Autoři: Flannery, M. J. ; Hanousek, Jan ; Shamshur, Anastasiya ; Trešl, Jiří
Typ dokumentu: Výzkumné zprávy
Rok: 2020
Jazyk: eng
Edice: CERGE-EI Working Paper Series, svazek: 661
Abstrakt: Using a large sample of European acquisitions, we find that acquired firms substantially close the gap between their actual and optimal leverage ratios. The bulk of this adjustment occurs quite rapidly – within a year of the acquisition. The typical over-levered firm adjusts its debtto-assets ratio from 34.4% in the year before acquisition to 20% in the year after. (The adjustment is smaller, but still quite rapid, for targets that had been under-leveraged.) These adjustments occur primarily through debt issuances or retirements. We also investigate whether target firms’ pre-merger leverage contributes to the probability of them being acquired. We find that firms further away from their optimal leverage are more likely to be acquired: for an average firm, an increase in the absolute leverage deviation from 1% to 10% of total assets increases the probability of being acquired by 4.1% to 5.6% (The larger effect applies to overleveraged firms.) Overall, our results provide support for the trade-off theory of capital structure and suggest that financial synergies have a significant role in the typical European acquisition decision.
Klíčová slova: leverage deficit; M&A; target capital structure

Instituce: Národohospodářský ústav AV ČR (web)
Informace o dostupnosti dokumentu: Dokument je dostupný na externích webových stránkách.
Externí umístění souboru: https://www.cerge-ei.cz/pdf/wp/Wp661.pdf
Původní záznam: http://hdl.handle.net/11104/0309830

Trvalý odkaz NUŠL: http://www.nusl.cz/ntk/nusl-438250


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