Leverage Deviations and Acquisition Probability in the UK: The Moderating Effect of Firms’ Internal Capabilities and Deal Diversification Potential

Agyei‐Boapeah, Henry; Osei, Deborah; Franco, Michael

doi:10.1111/emre.12307

Cited by 11 publications

(26 citation statements)

References 65 publications

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“…Harford [15] argued that firms with higher stock return are more likely to become acquirers. Similar findings have been reported in the developed market by the majority of past studies [16,19,20,24,35]…”

Section: Stock Returnsupporting

confidence: 90%

“…Past empirical findings also report findings that support the positive relationship that cash holding and M&A likelihood [33,34]. In contrast, Agyei-Boapeah et al, [24] document a negative relationship between cash holding and M&A likelihood by UK acquirers.…”

Section: Cash Holdingmentioning

confidence: 92%

“…Following past studies [15,23,24,30,33], this study uses probit regression to investigate impact of firms' characteristics on M&A probability by Malaysian listed firms. Equation 1 and 2 form the models of this study.…”

Section: Methodsmentioning

confidence: 99%

“…On the other hand, firms with a low market-to-book may be less attractive to involve in M&A. Past studies also find that market-to-book ratio has a positive impact on M&A likelihood [18,19,23,24,35].…”

Section: Market To Bookmentioning

confidence: 99%

“…The findings couldn't find any relationship between the lower acquisition probability and highly leveraged firm. However, majority of the past empirical studies in the developed markets document negative impact of leverage on M&A probability [18,20,[23][24][25][26].…”

Section: Financial Leveragementioning

confidence: 99%

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MandA Likelihood: Impact of Firm Characteristics

Al-Sabri¹,

Nordin²,

Shahar³

2020

SJEF

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This paper empirically examines firm-characteristics determinants of mergers and acquisitions (M&A) likelihood by Malaysian public listed firms. This study specifically investigates the impact of firm characteristics on acquisition likelihood using 9998 firm-year observations during the period from 2001 to 2018. Past studies regarding Malaysian M&As mostly focus on the performance of M&As and its determinants. Using probit regression, findings suggest that firms' size, sales growth, and stock return positively affect firm probability to involve in M&As. while, leverage, profitability, cash holding, and tangibility affect M&A likelihood negatively. The findings also suggest that firms' characteristics in the current M&A year can explain M&A decision better than they do in the pre-M&A year. Our findings provide insights to mangers, investors, and regulators in order to understand more about corporate takeovers which is an important growth and survival strategy for businesses.

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Section: Stock Returnsupporting

confidence: 90%

Section: Cash Holdingmentioning

confidence: 92%

Section: Methodsmentioning

confidence: 99%

Section: Market To Bookmentioning

confidence: 99%

Section: Financial Leveragementioning

confidence: 99%

See 3 more Smart Citations

MandA Likelihood: Impact of Firm Characteristics

Al-Sabri¹,

Nordin²,

Shahar³

2020

SJEF

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Minority versus majority: The choice of acquisition in Asia‐Pacific countries

2022

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This paper examines the relationship between the financial constraints of the acquiring firms and their choice of a minority over a majority acquisition. Our findings show that the likelihood of bidders undertaking a minority acquisition increases with financial constraints, including the deviation from target capital structure, and overleverage deficit. We also find that the impacts of leverage deviation on the likelihood of bidders engaging in a minority or majority acquisition is asymmetric for underleveraged and overleveraged firms. In addition, international bidders are less likely to take a minority acquisition if the target is operating in (i) countries with a higher degree of Political Stability and Absence of Violence/Terrorism, (ii) countries with higher degree to which individuals are able to participate in selecting their government, as well as having more freedom of expression, freedom of association, and a free media. Lastly, minority acquisitions are more common in a country with a more developed market. As such, in a fluid social order it looks like acquirers really need majority control.

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Internal capabilities, national governance and performance in African firms

Tunyi

Agyei‐Boapeah

Areneke

et al. 2019

Research in International Business and Finance

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We explore the relations between firms' internal capabilities, national governance quality (NGQ) and performance in the African context using a dataset comprised of 11,183 firm-year observations (1,490 unique firms from 15 African countries over a 17-year period). Our study offers new insights into how interlinkages between firms' internal and external environment, shape corporate success. Specifically, we find that (1) firms' internal capabilities (captured by financial resource-availability and growth prospects) are critical enablers of performance in both weak and strong institutional environments, (2) individual firms perform well in environments where their peers performs well, (3) NGQ directly enhances aggregate firm performance, and in tandem, the performance of individual firms, and (4) NGQ moderates the capability-performance nexus, by enhancing the translation of growth opportunities into profitability. The results highlight the critical role of firm-level financial resource availability and growth prospects in shaping corporate success in this challenging institutional environment.

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Leverage Deviations and Acquisition Probability in the UK: The Moderating Effect of Firms’ Internal Capabilities and Deal Diversification Potential

Cited by 11 publications

References 65 publications

MandA Likelihood: Impact of Firm Characteristics

MandA Likelihood: Impact of Firm Characteristics

Minority versus majority: The choice of acquisition in Asia‐Pacific countries

Internal capabilities, national governance and performance in African firms

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