Do managers keep their word? The disclosure of merger intention at pre-merger issuance and M&A performance

Guo, J. (M.), Li, L., Hu, N. and Wang, X. (2019) Do managers keep their word? The disclosure of merger intention at pre-merger issuance and M&A performance. Finance Research Letters, 28, pp. 20-31. (doi:10.1016/j.frl.2018.03.007)

Guo, J. (M.), Li, L., Hu, N. and Wang, X. (2019) Do managers keep their word? The disclosure of merger intention at pre-merger issuance and M&A performance. Finance Research Letters, 28, pp. 20-31. (doi:10.1016/j.frl.2018.03.007)

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Abstract

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.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Hu, Dr Nan
Authors: Guo, J. (M.), Li, L., Hu, N., and Wang, X.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Finance Research Letters
Publisher:Elsevier
ISSN:1544-6123
ISSN (Online):1544-6131
Published Online:21 March 2018
Copyright Holders:Copyright © 2018 Elsevier Inc.
First Published:First published in Finance Research Letters 28:20-31
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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