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Why do Surviving Targets Leverage so Much After an Acquistion ? A Governance Explanation

de La Bruslerie, Hubert (2018), Why do Surviving Targets Leverage so Much After an Acquistion ? A Governance Explanation, 17e Conférence Internationale de Gouvernance, 2018-06, NICE, France

Type
Communication / Conférence
Date
2018
Conference title
17e Conférence Internationale de Gouvernance
Conference date
2018-06
Conference city
NICE
Conference country
France
Metadata
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Author(s)
de La Bruslerie, Hubert
Dauphine Recherches en Management [DRM]
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 / Keywords
Acquisitions; Target firms; Creditor's holdup; Leverage; Transfer of value
JEL
G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
M10 - General