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
Type
Communication / ConférenceDate
2019Conference title
42nd EAA (European Accounting Association) Annual CongressConference date
2019-05Conference city
LimassolConference country
CyprusMetadata
Show full item recordAbstract (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 / Keywords
Transfer of value; Leverage; Creditor’s holdup; Target firms; AcquisitionsRelated items
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