To what extent does corporate liquidity affect M&amp;A decisions, method of payment and performance? Evidence from China

Yang, Jiansong; Guariglia, Alessandra; Guo, Jie

doi:10.1016/j.jcorpfin.2017.09.012

Cited by 87 publications

(84 citation statements)

References 76 publications

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“…This result suggests that firms with excess cash are less likely to involve in M&A activities compared with those with a deficit. Our finding contrasts with previous findings from developed countries [18,19,24,35,45]. Passible explanation is firms with higher profitability prefer to use excess cash to invest directly rather than M&A in order to support firm productivity and enhance its growth for short-term effects.…”

Section: Multivariate Analysiscontrasting

confidence: 99%

“…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%

“…In the first stream, they assume that firms level determinants in year t will affect M&A in year t+1 [17,41,42]. However, in the second stream, they assume that firms level determinants in year t will affect M&A in year t [16,18,23,35]. Aim the fact that there are introductory strands about M&A time, This study examined the impact of the independent variables on the likelihood of M&A on year t and year t+1 in separate models.…”

Section: Methodsmentioning

confidence: 99%

“…Market to the book has insignificant influence on M&A likelihood in both models. However, past studies documented positive impact for the market to book ratio on M&A decision [18,19,24,35]. The stock return has a positive significant impact on M&A.…”

Section: Multivariate Analysismentioning

confidence: 96%

“…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%

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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: Multivariate Analysiscontrasting

confidence: 99%

Section: Stock Returnsupporting

confidence: 90%

Section: Methodsmentioning

confidence: 99%

Section: Multivariate Analysismentioning

confidence: 96%

Section: Market To Bookmentioning

confidence: 99%

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MandA Likelihood: Impact of Firm Characteristics

Al-Sabri¹,

Nordin²,

Shahar³

2020

SJEF

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Stemming the tide: Does climate risk affect M&A performance?

2023

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We examine the effect of climate change risks (CCR) on firms' decision of engaging in mergers and acquisitions (M&A) and M&A performance. In this study we use the responses by firms on ‘climate change‐related risks and opportunities’ of the Carbon Disclosure Project (CDP) survey and 1372 deals of US listed firms during 2010–2020. Consistent with risk vulnerability theory, our evidence indicates that firms with higher CCR have a lower probability of engaging in M&As. After controlling for possible endogeneity, our results also indicate that if acquirers with higher climate change risks choose to engage in M&A, it significantly reduces the announcement returns. These findings suggest that extant measures of climate change risks should be rethought when evaluating M&A efficiency. More broadly, our paper provides causal evidence that managers need to integrate CCR into their formal risk management systems to avoid unsuccessful M&As.

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Ownership, institutions, and the agency of M&A completion

Lindner,

Müllner,

Puhr

2023

Global Strategy Journal

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Research SummaryIn this paper, we study how variations in debt and equity ownership and the institutions that govern interactions between different types of principals and agents affect the completion likelihood of acquisitions. Using a sample of 55,722 acquisitions, our study finds that risk‐averse debtholders reduce the completion likelihood of acquisitions. When acquisitions cross borders, the acquiring capital providers become exposed to institutional environments that have evolved to prioritize different ideologies or principals because of the structure and customers of local capital markets. As a result, institutional duality in home and target countries reduces the completion likelihood of acquisitions. Our study integrates varieties of capitalism arguments and firm‐level agency conflicts and highlights the theoretical importance of capital markets and their concentration.Managerial SummaryAn acquisition is a highly consequential negotiation process between managers and capital providers of a firm. Based on their evaluation of a potential deal, managers propose acquisitions to capital providers who either accept it or pressure managers into withdrawing from the announced deal. This study considers firms' capital structure and cross‐national differences in the governing institutions to explain the resistance of capital providers against announced acquisitions. In particular, it points to the fear of capital providers losing control of their firms as a driver of their resistance against cross‐border acquisitions. However, when a favorable capital‐market structure in the target's home country alleviates the fears of capital providers, their resistance weakens.

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To what extent does corporate liquidity affect M&A decisions, method of payment and performance? Evidence from China

Cited by 87 publications

References 76 publications

MandA Likelihood: Impact of Firm Characteristics

MandA Likelihood: Impact of Firm Characteristics

Stemming the tide: Does climate risk affect M&A performance?

Ownership, institutions, and the agency of M&A completion

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