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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.

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


Authors

N. Hu

L. Li



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
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

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