Farida, Siti (2021) Essays in mergers & acquisitions and leveraged buyouts. PhD thesis, University of Warwick.

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Abstract

This thesis consists of three essays in empirical corporate finance. Chapter 2 investigates what motivates acquisition by public firms and why the ownership form of targets matter for acquisition decision. We find that firms are more likely to acquire public (private) targets when they face higher (lower) competitive pressures in their product markets. After taking over public targets, acquirers increase their market shares, differentiate their products from close peers, and gain cost savings. In contrast, acquirers of private targets tend to increase capital and R&D expenditures, and PPE. These results suggest that acquirers of public (private) targets aim at consolidation (expansion). Firms' choice for a public versus private target aligns with different strategic motivations that can potentially explain differences in announcement returns between public- versus private-target acquisitions.

Chapter 3 examines the impact of acquiring public versus private targets on acquirers' innovation outcomes. Our analysis shows an increase in innovation outcomes post-acquisitions for private target acquirers relative to matched _rms and public target acquirers. Public target acquirers do not increase innovation post deals. Acquiring private targets improves also innovation efficiency. We also find that acquiring private targets with existing patents is associated with a larger increase in exploitative innovation, but no additional effect for exploratory innovation. The 5-day CARs are higher for private target acquirers with the largest improvement in innovation. The higher expectation of improvement in innovation for private targets contributes to explaining the puzzle of announcement-return differences.

Chapter 4 studies spillover effects of LBOs on peers. I show that LBOs are associated with a decrease in profitability, market shares, operating efficiency, and savings in net working capital for peers. LBOs are likely to create pressures, which correspond to peers' adverse outcomes. I find that the improvement in market shares and asset turnover at LBO targets corresponds to a further deterioration on peers' profitability. The adverse effects due to LBOs, however, disappear when individual peers have initiated improvement in a similar way as target firms. As peers respond to the pressures by improving their profitability margin, product differentiation, and capital expenditures, peers are able to mitigate the worse outcomes post LBOs. Lastly, I document that negative spillover effects on industry dynamics are more pronounced in less competitive industries and industries with lower entry barriers.

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce H Social Sciences > HG Finance
Library of Congress Subject Headings (LCSH):	Corporations -- Finance, Consolidation and merger of corporations, Leveraged buyouts
Official Date:	November 2021
Dates:	Date Event November 2021 UNSPECIFIED
Institution:	University of Warwick
Theses Department:	Warwick Business School
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Fidrmuc, Jana P. ; Zhang, Chendi ; Skeie, David
Format of File:	pdf
Extent:	xiii, 208 leaves
Language:	eng

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