Hurdle rate buffers and bargaining power in asset acquisition

• 成果类型: Article
• 署名作者: Barry, John W.; Carlin, Bruce I.; Crane, Alan D.; Graham, John R.
• 署名单位: Rice University; Duke University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2026.104240
• 发表日期: 2026-04
• 页码: 104240
• 关键词: Hurdle rates; Capital budgeting; cost of capital; Corporate investment; ROIC; Delegated bargaining; acquisition; Announcement returns; rent-seeking; asymmetric information; DELEGATION; MARKET; equilibrium; incentives; distortion; Contest; rise

摘要

CFOs report using elevated hurdle rates that average 6.6 percentage points above the cost of capital. We show that hurdle rate buffers act as a commitment device and convey a bargaining advantage over counterparties during project development and M&A. This benefit can exceed the opportunity cost of forgone projects and acquisitions, preserving firm value. Consistent with our model, bidders' elevated hurdle rates in M&A deals associate with higher surplus capture ex post; in CFO survey data, hurdle rate buffers negatively relate to ex ante bargaining power, and realized returns cluster just above elevated hurdle rates.