Determinants of the medium of payment used to acquire privately-held targets

Madura, Jeff; Ngo, Thanh

doi:10.1007/s12197-010-9130-2

Cited by 8 publications

(4 citation statements)

References 28 publications

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“…On the one hand, prices do depend on a large extent on expectations of future development, which are often very different in different industries or economic environments [25]. A relatively good market environment may further lead to an overestimation of the synergies that target firms can bring about in the future, leading to higher premium levels [26]. On the other hand, when the level of marketization is high, it is more likely to cause excessive competition among enterprises.…”

Section: Research On the Influencing Factors Of Manda Premiummentioning

confidence: 99%

“…Finally, it is worth noting that the research on the premium of enterprises traces back to whether the pricing decision in M&A activities is scientific and reasonable. Domestic scholars Lei Yu and Wu Shinong (2007) found that only a few hypotheses are significant through the correlation analysis of Western M&A premium theories such as principal-agent theory and value creation theory [26].…”

Section: Future Research Directionsmentioning

confidence: 99%

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The Review of Factors Affecting Merger Premium

Zhang¹

2019

JSSM

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As mergers and acquisitions (M&A) become more and more frequent around the world, the phenomenon of the extreme premium in mergers and acquisitions has begun to expose to the public and attract the widespread attention of scholars. In particular, in recent years, Chinese enterprises have been extremely overpriced in mergers and acquisitions. Based on this, the paper reviews the literature about the determinants of M&A premium and the related theories from three aspects: macro environment factors, business factors and management factors. Finally, the shortcomings of the existing research are analyzed and the prospect of the future research is put forward.

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Section: Research On the Influencing Factors Of Manda Premiummentioning

confidence: 99%

Section: Future Research Directionsmentioning

confidence: 99%

The Review of Factors Affecting Merger Premium

Zhang¹

2019

JSSM

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“…Bi and Gregory (2011) focus on the over-valuation of acquirers. Madura and Ngo (2012) analyze acquisitions of private rms and nd an information asymmetry eect.…”

Section: Introductionmentioning

confidence: 99%

M&A and the Tax Benefits of Debt-Financing

Scheuering¹

2014

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.M &A and the Tax Benets of Debt-Financing * Uwe ScheueringCentre for European Economic Research (ZEW) † March 2014Abstract:The deductibility of interest expenses from the corporate tax base creates an incentive for acquiring companies to nance a takeover with debt. In this paper, I investigate the impact of prot taxation on the nancing decision in corporate acquisitions for the rst time for a sample of dierent acquirer-countries mainly in Europe. The likelihood to observe a debt-nanced acquisition is found to increase in the acquirer's tax rate. In addition, I take into account that the nancing decisions of particular acquisitions might not be independent from other investment decisions. Therefore, I analyze the acquirer's capital structure development around the acquisition and nd an increase in the statutory tax rate by one %-point to be associated with a stronger increase in the debt ratio by 0.55 %-points during the acquisition period. Non-Technical Summary I examine the extent to which acquiring companies make use of the tax advantage of debt-nancing in the acquisition period. The intuition is that companies can reduce their tax burden by means of debt-nancing because interest expenses are deductible from the corporate tax base and therefore create a tax shield. In contrast, dividends, in a sense the interest payments to equity providers, are not deductible.The relevance of interest tax shields for acquiring companies was highlighted by the French announcement of increasing taxes and at the same time restricting the deductibility of interest expenses in 2012. Private equity rms, which often undertake mainly debtnanced acquisitions, heavily complained about this notication and even threatened to leave France.The tax advantage of debt might lead to economically inecient high debt ratios and, therefore, to higher risk of nancial distress and lower resistance to crisis. Moreover, it can make acquisitions protable, which would not occur in a world without tax discrimination of equity. Furthermore, multinational companies face tax planning opportunities when it comes to the nancing decision of corporate acquisitions due to the dierent tax systems and tax rates in the countries their subsidiaries are located in.I have analyzed the nancing decision in corporate acquisitions between 2001 and 2011 across many, mainly European countries. The empirical approach consisted of two parts. First, I examined the probability to observe a debt-nanced deal. Second, I took a look...

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“…In cash transactions the acquirer directly purchases all equity shares of the target company. Here the shareholders of the acquirer bear all the risk from the transaction with regard to the post-merger performance, while the overall financial risk for the acquirer is associated with the total transaction value and is dependent on the value of the acquirer relative to the value of to the target company (Martin 1996;Madura & Ngo 2012;Faulkner et al 2012). In stock-for-stock mergers the acquirer offers its own shares for the shares of the target's shareholders according to a predetermined exchange ratio (Houston & Ryngaert 1997).…”

Section: Merger Eventsmentioning

confidence: 99%

Activity in Social Media related to Business Events: The Case of Merger Announcements

Zülch¹

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From Facebook (i.e. a social network site) to Twitter (i.e. a microblog), a large variety of social media types and platforms facilitate information exchange among individuals. The information systems literature provides theoretical approaches to understand media choice, especially when multiple electronic media are available. In this empirical study, we seek to understand social media choice in the context of major business events. We explore how individuals make use of different social media types at different times during the communication process subsequent to the announcement of major business events. While controlling for other task-related influencing factors, our analysis provides evidence that the successive choices of social media types determine the task-related communication process.

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Determinants of the medium of payment used to acquire privately-held targets

Cited by 8 publications

References 28 publications

The Review of Factors Affecting Merger Premium

The Review of Factors Affecting Merger Premium

M&A and the Tax Benefits of Debt-Financing

Activity in Social Media related to Business Events: The Case of Merger Announcements

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