Two Essays on Leverage, Mergers and Acquisitions, and Institutional Investors PDF Download

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Two Essays on Leverage, Mergers and Acquisitions, and Institutional Investors

Two Essays on Leverage, Mergers and Acquisitions, and Institutional Investors PDF Author: Chune Young Chung
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ISBN: 9781267476524
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Languages : en
Pages :

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Book Description
In the first essay of my dissertation, I study how bidders' appetite for financial and operating (expected and unexpected) leverage of targets affects merger activities, and whether this appetite varies through the business cycle. I document evidence that bidders have a time-varying appetite for targets' leverages through the business cycle. The effect of financial and operating leverage on the likelihood of becoming a target of a takeover, likelihood of becoming an acquirer, the takeover premium, the announcement CARs of bidders, and long-run BHARs of bidders all depend on the business cycle. The time-varying effects of leverage on merger decisions are consistent with the time-varying benefits of financial and operating leverage, and uniquely capture the well-known time-varying risk in corporate investments.