Market Returns and Interim Risk in Mergers

• 成果类型: Article
• 署名作者: Heath, Davidson; Mitchell, Mark
• 署名单位: Utah System of Higher Education; University of Utah; University of Chicago
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4315
• 发表日期: 2023
• 页码: 617-635
• 关键词: mergers; acquisitions; completion; termination; Market crash; interim risk; RENEGOTIATION

摘要

A primary concern in mergers and acquisitions is the risk the deal may be cancelled before it is completed. We document that ???interim risk??? varies asymmetrically with the aggregate market return. Deals tend to be renegotiated when the market rises, but cancelled when the market crashes. These effects are conditional on the method of payment and the contracting stage of the deal, consistent with a mechanism of ex post renegotiation. Variation in interim risk over time alters the method of payment in mergers and the firms that are targeted and acquired.