Deviation from the target capital structure and acquisition choices

• 成果类型: Article
• 署名作者: Uysal, Vahap B.
• 署名单位: University of Oklahoma System; University of Oklahoma - Norman
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2010.11.007
• 发表日期: 2011
• 页码: 602-620
• 关键词: Target capital structure; M&A; Leverage deficit; Acquirer returns; Method of payment

摘要

This study finds that managers take deviations from their target capital structures into account when planning and structuring acquisitions. Specifically, firms that are overleveraged relative to their target debt ratios are less likely to make acquisitions and are less likely to use cash in their offers. Furthermore, they acquire smaller targets and pay lower premiums. Managers of overleveraged firms also actively rebalance their capital structures when they anticipate a high likelihood of making an acquisition. Finally, they pursue the most value-enhancing acquisitions. Collectively, these findings improve understanding of how firms choose their capital structures and shed light on the interdependence of capital structure and investment decisions in the presence of financial frictions. (C) 2011 Elsevier B.V. All rights reserved.