Why do surviving targets leverage so much after an acquisistion: A governance explanation
Enache, Luminita; de La Bruslerie, Hubert (2019), Why do surviving targets leverage so much after an acquisistion: A governance explanation, 42nd EAA (European Accounting Association) Annual Congress, 2019-05, Limassol, Cyprus
TypeCommunication / Conférence
Conference title42nd EAA (European Accounting Association) Annual Congress
MetadataShow full item record
Abstract (EN)Surviving public firms after an acquisition will show important changes as the new controller generally undertakes investment and reorganization decisions to create additional value and seize synergies. An important issue is to balance a creditor’s holdup mechanism with the possibility for the creditors to capture a part of the synergy gains at the target’s level. We demonstrate empirically that an increase in leverage is developed to limit a transfer of value to creditors. The changes in financing structure are implemented shortly after the acquisition.
Subjects / KeywordsTransfer of value; Leverage; Creditor’s holdup; Target firms; Acquisitions
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