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Acquisition Premium, Leverage Change and Post-Acquisition Performance

Feng, Ling and Urbán, Péter (2012) BUSN89 20121
Department of Business Administration
Abstract
This paper focused on the relation between acquisition premium, acquirer leverage change and the post-acquisition performance. The purpose is to empirically examine the mediating role of acquirer leverage change between acquisition premiums and post-acquisition performance.
A four-step mediation framework was employed, as proposed in Krishnan et al. (2007), combined with the controlling for other eight explanations.
This study is built upon prior research on acquisition premium and the mixed effect of leverage increase over operating performance. The interaction between premium and leverage change are explored, with a focus on their influence over post-acquisition performance.
A sample of 109 European acquisitions completed in the... (More)
This paper focused on the relation between acquisition premium, acquirer leverage change and the post-acquisition performance. The purpose is to empirically examine the mediating role of acquirer leverage change between acquisition premiums and post-acquisition performance.
A four-step mediation framework was employed, as proposed in Krishnan et al. (2007), combined with the controlling for other eight explanations.
This study is built upon prior research on acquisition premium and the mixed effect of leverage increase over operating performance. The interaction between premium and leverage change are explored, with a focus on their influence over post-acquisition performance.
A sample of 109 European acquisitions completed in the period of 1997-2009 has been studied empirically. The data was collected from the Zephyr and Reuters DataStream databases
Results show negative relation between premiums and performance, as well as a negative impact of premium paid over acquirer leverage increase. Additionally, the increase of acquirer leverage as a result of the acquisition will enhance the post-acquisition performance under abnormal return model. But the acquirer leverage change does not mediate the negative relationship between premiums and post-acquisition performance; other deal-specific characteristics might be a better mid-path between premium-performance relations (Less)
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author
Feng, Ling and Urbán, Péter
supervisor
organization
alternative title
A Study of European Acquisitions
course
BUSN89 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Mergers and Acquisitions, Acquisition Premium, Leverage Change, Post-Acquisition Performance, Europe
language
English
id
2797111
date added to LUP
2012-06-25 09:30:34
date last changed
2012-06-25 09:30:34
@misc{2797111,
  abstract     = {This paper focused on the relation between acquisition premium, acquirer leverage change and the post-acquisition performance. The purpose is to empirically examine the mediating role of acquirer leverage change between acquisition premiums and post-acquisition performance.
A four-step mediation framework was employed, as proposed in Krishnan et al. (2007), combined with the controlling for other eight explanations.
This study is built upon prior research on acquisition premium and the mixed effect of leverage increase over operating performance. The interaction between premium and leverage change are explored, with a focus on their influence over post-acquisition performance.
A sample of 109 European acquisitions completed in the period of 1997-2009 has been studied empirically. The data was collected from the Zephyr and Reuters DataStream databases
Results show negative relation between premiums and performance, as well as a negative impact of premium paid over acquirer leverage increase. Additionally, the increase of acquirer leverage as a result of the acquisition will enhance the post-acquisition performance under abnormal return model. But the acquirer leverage change does not mediate the negative relationship between premiums and post-acquisition performance; other deal-specific characteristics might be a better mid-path between premium-performance relations},
  author       = {Feng, Ling and Urbán, Péter},
  keyword      = {Mergers and Acquisitions,Acquisition Premium,Leverage Change,Post-Acquisition Performance,Europe},
  language     = {eng},
  note         = {Student Paper},
  title        = {Acquisition Premium, Leverage Change and Post-Acquisition Performance},
  year         = {2012},
}