Research Library

Premium Corporate Debt Maturity and Acquisition Decisions
Fu, Xudong,
Tang, Tian
Publication year2016
Publication titleFinancial Management
Resource typePeriodical
PublisherFinancial Management
This paper provides an empirical analysis of the effects of corporate debt maturity on firms’ acquisition decisions using a large sample of acquisitions from 1991 to 2010. We find that firms with shorter debt maturity are less likely to undertake acquisitions. If they do, they are more likely to undertake smaller deals, take more time to complete, are less likely to make all cash offers, and tend to use less cash in the payment. These results support the predictions of the increased liquidity risk hypothesis. We also find that acquirers with shorter debt maturity realize higher announcement returns and experience better long‐term stock returns and operating performance. These results suggest that short debt maturity improves the efficiency of capital allocation through acquisition decisions.
ISSN00463892; 1755053X

Seeing content that should not be on Zendy? Contact us.

This content is not available in your region!

Continue researching here.

Having issues? You can contact us here