Three essays on mergers and acquisitions

Yuan, Jiayi (2023). Three essays on mergers and acquisitions. University of Birmingham. Ph.D.

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This thesis explores the motives and effects of mergers and acquisitions (M&As) in different institutional contexts. The first paper shows that M&As help firms navigate the challenges arising from green policies. It exploits the adoption of the NOx Budget Program (NBP) across U.S. states as an exogenous shock to investigate the impact of climate policy risk on M&As. The results suggest that manufacturers headquartered in NBP-participating states are more likely to initiate M&A deals to reduce future cash flow volatilities and financial distress risks. The M&A involvement is more pronounced for firms with a higher degree of financial distress, firms with greater product market competition, and firms facing more firm-level uncertainty shocks. Further, treated firms are less likely to finance M&A transactions with cash and tend to pay higher takeover premiums to induce target shareholders to accept stock payments. Collectively, this paper revisits the motives and effects of M&As in the context of green policies and supports the neoclassical view of M&As as being an effective tool for diversifying risks and regaining financial strength. The second paper provides evidence that the presence of top-tier advisors increases managers’ propensity for withdrawing cross-border mergers and acquisitions (CBAs) with poor market returns around the announcement. This effect is stronger for private target acquisitions where information asymmetry is expected to be more pronounced, and for smaller bidders who are likely to lack the expertise to process information on themselves. This suggests that managers assisted by reputable investment banks consider the negative market feedback in informationally challenging deals. This paper provides novel inferences about the informative role of stock markets in shaping advisory roles for cross-border M&As. The third paper finds that managers of Chinese state-sponsored bidders broaden their acquisition targets from the strict patent-intensive sectors (“high-tech” industries only) to the loose patent-intensive sectors (a wider range of technology sectors). In doing so, they satisfy the Chinese government’s call to acquire innovative targets, while at the same time they mitigate the resistance of host governments to the growing Chinese influence on the corporate scene. We show that Chinese state-sponsored bidders face fewer setbacks, improve the innovation growth rate, and protect shareholder wealth when they target firms from the loose innovation-intensive sectors.

Type of Work: Thesis (Doctorates > Ph.D.)
Award Type: Doctorates > Ph.D.
Licence: All rights reserved
College/Faculty: Colleges (2008 onwards) > College of Social Sciences
School or Department: Birmingham Business School, Department of Finance
Funders: None/not applicable
Subjects: H Social Sciences > HG Finance


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