Do managers keep their word? The disclosure of merger intention at pre-merger issuance and M&A performance
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.
- Loughborough Business School
Published inFinance Research Letters
Pages20 - 31
- AM (Accepted Manuscript)
Rights holder© Elsevier
Publisher statementThis paper was accepted for publication in the journal Finance Research Letters and the definitive published version is available at https://doi.org/10.1016/j.frl.2018.03.007