Presenter Information

Cameron GaechterFollow

Panel Name

Advances in Business and Management

Location

Lecture Center 13

Start Date

3-5-2019 3:15 PM

End Date

3-5-2019 4:30 PM

Presentation Type

Oral Presentation

Academic Major

Accounting, Finance

Abstract

The purpose of this study is to examine abnormal wealth effects observed by acquirer and target shareholders in technology-sector M&A deals, as well as the effect that liquidity positioning has on merger premiums or discounts. Abnormal wealth effects experienced by the acquirer and target both pre- and post-merger announcement were tested in a two-sided event study consisting of a large sample of companies representing the two sides of the transaction. The event study demonstrates that different characteristics of M&A deals, i.e. payment consideration and domesticity, have asymmetric effects on abnormal wealth effects for shareholders of both parties, with the most dramatic effects manifesting in high abnormal returns prior-to, and after acquisition announcement dates for targets. It is concluded that the liquidity ratios such as current assets to current liabilities and cash as a percentage of total assets has no significant effect on merger premiums while the solvency measure of total assets to total liabilities has a significantly negative effect on merger premiums for both bidders and targets.

Select Where This Work Originated From

Departmental Honors Thesis

Award

Presidential Award

First Faculty Advisor

Rita Biswas

First Advisor Email

biswas.rita@gmail.com

First Advisor Department

Finance

The work you will be presenting can best be described as

Finished or mostly finished by conference date

Share

COinS
 
May 3rd, 3:15 PM May 3rd, 4:30 PM

The Role of Liquidity in Technology Sector M&As

Lecture Center 13

The purpose of this study is to examine abnormal wealth effects observed by acquirer and target shareholders in technology-sector M&A deals, as well as the effect that liquidity positioning has on merger premiums or discounts. Abnormal wealth effects experienced by the acquirer and target both pre- and post-merger announcement were tested in a two-sided event study consisting of a large sample of companies representing the two sides of the transaction. The event study demonstrates that different characteristics of M&A deals, i.e. payment consideration and domesticity, have asymmetric effects on abnormal wealth effects for shareholders of both parties, with the most dramatic effects manifesting in high abnormal returns prior-to, and after acquisition announcement dates for targets. It is concluded that the liquidity ratios such as current assets to current liabilities and cash as a percentage of total assets has no significant effect on merger premiums while the solvency measure of total assets to total liabilities has a significantly negative effect on merger premiums for both bidders and targets.