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

Guo, Jie (Michael), Lu Li, Nan Hu and Xing Wang

Finance Research Letters, 2019, vol. 28, issue C, 20-31

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.

Keywords: Merger intention; Equity issuance; Debt issuance; Mergers & acquisitions; Event studies (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Date: 2019
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