Do Managers Keep Their Word? The Disclosure of Merger Intention at Pre-merger Issuance and M&A Performance

Guo, M.; Hu, N.; Li, L.; Wang, X.

Abstract

This paper investigates whether disclosing merger intention at the announcement of equity/debt issuance has an impact on subsequent M&A transactions. We find that companies tend to issue higher proceeds when they reveal their merger intentions, and, subsequently, they are more likely to complete the merger deal itself and pay a higher bid premium. However, we did not find a significant difference in merger performance between firms revealing merger intention and others. Our finding is consistent with the capital need theory.

Citation

Guo, M., Hu, N., Li, L., & Wang, X. (2019). Do Managers Keep Their Word? The Disclosure of Merger Intention at Pre-merger Issuance and M&A Performance. Finance Research Letters, 28, 20-31. https://doi.org/10.1016/j.frl.2018.03.007

• Journal Article Type: Article
• Acceptance Date: Mar 16, 2018
• Online Publication Date: Mar 21, 2018
• Publication Date: Mar 31, 2019
• Deposit Date: Mar 16, 2018
• Publicly Available Date: Mar 21, 2019
• Journal: Finance Research Letters
• Print ISSN: 1544-6123
• Electronic ISSN: 1544-6131
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 28
• Pages: 20-31
• DOI: https://doi.org/10.1016/j.frl.2018.03.007
• Public URL: https://durham-repository.worktribe.com/output/1364991