Mergers Leverage Dynamics and Post-Merger Integration Duration

DOI

10.2991/mse-17.2017.63How to use a DOI?

Keywords

post-merger integration duration, leverage, method of payment

Abstract

This paper examines the effects of the post-merger integration duration on acquiring rms' leverage behavior before and after a merger, using a dynamic model in which full merger benefits cannot be consumed at the instant of a merger, but rather after a pre-specialized post-merger integration period. The model generates new implications related toacquiring rms' leverage dynamics along with method of payment choice. Specifically, the model indicates that the post-merger integration duration is negatively associated with themarket leverage of newly-merged rms at the time of merger completion and during theintegration period. Further, acquirer managers are more likely to use equity to finance a merger when the integration duration is likely to be lengthy. Our empirical tests provide evidence consistent with the model implications.

Copyright

© 2017, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Yao Cheng
PY  - 2017/10
DA  - 2017/10
TI  - Mergers Leverage Dynamics and Post-Merger Integration Duration
BT  - Proceedings of the 3rd Annual 2017 International Conference on Management Science and Engineering (MSE 2017)
PB  - Atlantis Press
SP  - 270
EP  - 274
SN  - 2352-5428
UR  - https://doi.org/10.2991/mse-17.2017.63
DO  - 10.2991/mse-17.2017.63
ID  - Cheng2017/10
ER  -