The Real Effects of Uncertainty on Merger Activity

• 成果类型: Article
• 署名作者: Bhagwat, Vineet; Dam, Robert; Harford, Jarrad
• 署名单位: University of Oregon; University of Colorado System; University of Colorado Boulder; University of Washington; University of Washington Seattle
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhw061
• 发表日期: 2016
• 页码: 3000
• 关键词: acquisitions; MARKET; waves; takeover; IMPACT; INVESTMENT; valuation; DYNAMICS; COLLARS; shocks

摘要

Firm values can substantially change between the time deal terms are set and the actual deal closing, risking renegotiation, or termination. We find increases in market volatility decrease subsequent deal activity, but only for public targets subject to an interim period. The effect is strongest when volatility is highest, for deals taking longer to close, and for larger targets. Merging parties attempt to shorten the interim window as risk increases. Firm- and industry-level uncertainty measures reveal similar findings, ruling out an unobserved macro variable. We conclude interim uncertainty contributes to understanding the timing and intensity of public firms' merger activity.