@misc{9245306,
  abstract     = {{Purpose: To examine whether an acquirer’s risk exposure affects the acquisition premium paid
in public-to-public M&A transactions, specifically isolating the effects of leverage and stock
return volatility alongside the moderating role of free cash flow.

Methodology: The study employs multivariate OLS regressions with year and industry fixed
effects and heteroskedasticity-robust standard errors to examine how leverage, stock return
volatility, and free cash flow interactions relate to 4-week pre-announcement acquisition
premiums. Robustness tests assess result sensitivity.

Theoretical perspectives: The framework uses agency theory, the free cash flow hypothesis, the
hubris hypothesis, and the information asymmetry framework.
Empirical foundation: The study is based on 1,654 completed public-to-public M&A
transactions involving US targets, announced between 2000 and 2025.

Conclusion: Baseline regressions show no statistically significant relationship between leverage
or volatility and the premium, suggesting that external governance and market conditions
neutralise firm-specific risk. However, the interaction model indicates a significant debt
disciplining effect, but only among cash-poor acquirers. Overall, risk exposure does not seem to
drive the acquisition premium. Instead, debt constrains bidding behaviour only when internal
resources are limited.}},
  author       = {{Enocson, Karl and Johansson Agopian, Julianna}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Bound by Debt or Driven by the Market?}},
  year         = {{2026}},
}