Journal of Corporate Finance Vol. 26 2014
What drives corporate minority acquisitions around the world? The case for financial constraints
Abstract
In this paper, I examine minority block acquisitions from 1990 to 2009, as well as possible theories for the presence of equity stake purchases. I find that target firms are financially constrained. Acquisitions significantly increase their stock prices at announcement, along with their investment expenditures afterwards. In the two years following the acquisition, 27% (9%) issue new equity (debt) and raise 27% (24%) of their market capitalization. These findings support the theory that equity stakes certify the investment opportunities of target firms. I also find some support for the contracting motive, mostly in countries with good investor protection and a well-performing banking sector.
- DOI
- 10.1016/j.jcorpfin.2014.02.007
- Volume
- 26
- Pages
- 78-95
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib