This thesis examines the impact of sources of financing on the performance of M&As and the value of firm diversification. Chapter Three examines how sources of financing between corporate cash holdings and bank lines of credit affect the performance of M&As. The evidence shows that the M&As financed by bank lines of credit have higher stock return performance and operating performance than those financed by corporate cash holdings. Firms with higher institutional ownership are more likely to use bank lines of credit as a source of financing in M&As. Moreover, M&As that are financed entirely by bank lines of credit are associated with lower acquisition premiums than those financed by corporate cash holdings. The outperformance is only significant in firms with a lower level of corporate governance and firms with a lower level of bankruptcy risk. Further, the fraction of bank lines of credit used as the source of financing is positively related to the performance of M&As, and the costs associated with bank lines of credit are negatively related to the performance of M&As. The results are consistent with the hypothesis based on agency problems between shareholders and managers. Chapter Four examines how sources of financing between corporate cash holdings, other bank loans, debt issues, and equity issues affect the performance of M&As. The evidence shows that the M&As financed by other bank loans and debt issues are associated with higher announcement returns, higher operating performance, and lower premiums than those financed by corporate cash holdings. Moreover, poorly governed firms benefit from the use of debt financing, and the positive effect of debt financing on M&As is only pronounced among firms with a lower level of bankruptcy risk. The results are consistent with the hypothesis based on agency problems between shareholders and managers. Chapter Five examines how the sources of financing between bank lines of credit and corporate cash holdings in M&As affect the value of firm diversification. The evidence shows that firms financed by bank lines of credit in M&As have a smaller reduction in excess value, more efficient internal resources transfers, and a higher value added by allocation than those financed by corporate cash holdings. Firms with higher institutional ownership are more likely to use bank lines of credit in M&As. Moreover, firms financed by bank lines of credit have a higher value of firm diversification than those financed by corporate cash holdings if they have a lower level of corporate governance and a lower level of bankruptcy risk. The results are consistent with the hypothesis based on agency problems between shareholders and managers.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:744057 |
| Date | January 2018 |
| Creators | Liu, Jian |
| Contributors | Tong, Zhenxu |
| Publisher | University of Exeter |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://hdl.handle.net/10871/33108 |
Page generated in 0.0014 seconds