University of Illinois Urbana-Champaign

Two essays on shareholder returns and the form of financing in mergers and tender offers

Sung, Hyun Mo

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Description

Title
Two essays on shareholder returns and the form of financing in mergers and tender offers
Author(s)
Sung, Hyun Mo
Issue Date
1990
Doctoral Committee Chair(s)
Lakonishok, Josef
Department of Study
  • Business Administration, General
  • Economics, Finance
Discipline
  • Business Administration, General
  • Economics, Finance
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
  • Business Administration, General
  • Economics, Finance
Language
eng
Abstract
  • The first essay examines the determinants of returns for bidding firms' stocks in mergers and tender offers using cross-sectional micro-firm data. First, we find that potential overpayments to target shareholders are important for explaining cross-sectional differences in bidders' returns upon the announcement of mergers and tender offers. Second, we find that ceteris paribus cash offers are likely to be chosen by relatively cash rich and low growth firms, and stock exchange offers to be chosen by relatively cash poor and high growth firms. The latter finding is consistent with the pecking order hypothesis.
  • The second essay examines the determinants of rates of return for target firms' stocks in mergers and tender offers using cross-sectional micro-firm data. We find that the difference in abnormal returns between cash offers and stock exchange offers cannot be explained by the difference in tax liabilities of target shareholders between cash offers and stock exchange offers. An alternative explanation is that the expectation of future competition in tender offers might be higher than that in mergers, causing higher target abnormal returns in tender offers.
Type of Resource
text
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http://hdl.handle.net/2142/23498
Copyright and License Information
Copyright 1990 Sung, Hyun Mo

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