Cross-border mergers and acquisitions and default risk
Article
Article Title | Cross-border mergers and acquisitions and default risk |
---|---|
ERA Journal ID | 19556 |
Article Category | Article |
Authors | Koerniadi, Hardjo (Author), Krishnamurti, Chandrasekhar (Author) and Tourani-Rad, Alireza (Author) |
Journal Title | International Review of Financial Analysis |
Journal Citation | 42, pp. 336-348 |
Number of Pages | 13 |
Year | 2015 |
Publisher | Elsevier |
Place of Publication | Netherlands |
ISSN | 1057-5219 |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.irfa.2015.08.009 |
Web Address (URL) | http://www.journals.elsevier.com/international-review-of-financial-analysis |
Abstract | We examine the impact of cross-border mergers on acquirers’ post-merger default risk using a sample of 375 US acquiring firms from 1997 to 2011. After controlling for cultural, institutional, geographic and managerial factors between the US and target firm countries, we find that on average, cross-border transactions decrease the level of default risk of the acquiring firms. Our results are consistent with the asymmetric information hypothesis that managers take advantage of the overvaluation and volatility of their stock prices. We also observe that the geographic distance and industrial relatedness play significant roles in affecting post-merger default risk but find limited evidence indicating the relevance of institutional environments and cultural factors on changes in default risk. Another significant finding is that managers use cross-border mergers to manage the extant risk of their firms. However, their incentives to use cross-border mergers to manage risk is mitigated by option compensation. |
Keywords | cross-border mergers; default risk; idiosyncratic risk |
ANZSRC Field of Research 2020 | 350202. Finance |
Public Notes | File reproduced in accordance with the copyright policy of the publisher/author. |
Byline Affiliations | Auckland University of Technology, New Zealand |
School of Commerce | |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q338x/cross-border-mergers-and-acquisitions-and-default-risk
Download files
1685
total views1004
total downloads7
views this month0
downloads this month