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Article: Signaling, financial slack and corporate acquisitions
Title | Signaling, financial slack and corporate acquisitions |
---|---|
Authors | |
Keywords | Acquisitions Asymmetric information Financial slack Signaling and net pension assets |
Issue Date | 2000 |
Publisher | Springer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0924-865X |
Citation | Review Of Quantitative Finance And Accounting, 2000, v. 15 n. 3, p. 195-216 How to Cite? |
Abstract | This paper shows that under certain conditions a firm's decision concerning the optimal medium of exchange to use in acquiring another firm is related to the decision of which source of capital should be used to finance long-term projects. An example of this type of interaction occurs when the firm's only source of financing a positive net present value project is an equity issue. In a Myers and Majluf (1984) world of asymmetric information the value maximizing strategy for the firm is to forego the public equity offering and instead use a stock offer to acquire a firm possessing financial slack. The process is modeled using an extension of the Myers and Majluf (1984) model and demonstrates how the acquisition alternative allows managers to separate the signals regarding the investment and financing decisions. Including net pension assets into our measure of financial slack, we provide empirical supports for the ability of the extended model to explain observed merger activity. © 2000 Kluwer Academic Publishers. |
Persistent Identifier | http://hdl.handle.net/10722/85683 |
ISSN | 2023 Impact Factor: 1.9 2023 SCImago Journal Rankings: 0.553 |
References |
DC Field | Value | Language |
---|---|---|
dc.contributor.author | Bowers, HM | en_HK |
dc.contributor.author | Moore, NH | en_HK |
dc.contributor.author | Maurice Tse, KS | en_HK |
dc.date.accessioned | 2010-09-06T09:07:59Z | - |
dc.date.available | 2010-09-06T09:07:59Z | - |
dc.date.issued | 2000 | en_HK |
dc.identifier.citation | Review Of Quantitative Finance And Accounting, 2000, v. 15 n. 3, p. 195-216 | en_HK |
dc.identifier.issn | 0924-865X | en_HK |
dc.identifier.uri | http://hdl.handle.net/10722/85683 | - |
dc.description.abstract | This paper shows that under certain conditions a firm's decision concerning the optimal medium of exchange to use in acquiring another firm is related to the decision of which source of capital should be used to finance long-term projects. An example of this type of interaction occurs when the firm's only source of financing a positive net present value project is an equity issue. In a Myers and Majluf (1984) world of asymmetric information the value maximizing strategy for the firm is to forego the public equity offering and instead use a stock offer to acquire a firm possessing financial slack. The process is modeled using an extension of the Myers and Majluf (1984) model and demonstrates how the acquisition alternative allows managers to separate the signals regarding the investment and financing decisions. Including net pension assets into our measure of financial slack, we provide empirical supports for the ability of the extended model to explain observed merger activity. © 2000 Kluwer Academic Publishers. | en_HK |
dc.language | eng | en_HK |
dc.publisher | Springer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0924-865X | en_HK |
dc.relation.ispartof | Review of Quantitative Finance and Accounting | en_HK |
dc.subject | Acquisitions | en_HK |
dc.subject | Asymmetric information | en_HK |
dc.subject | Financial slack | en_HK |
dc.subject | Signaling and net pension assets | en_HK |
dc.title | Signaling, financial slack and corporate acquisitions | en_HK |
dc.type | Article | en_HK |
dc.identifier.openurl | http://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0924-865X&volume=15&issue=3&spage=195&epage=216&date=2000&atitle=Signaling,+Financial+Slack+and+Corporate+Acquisitions | en_HK |
dc.identifier.email | Maurice Tse, KS: ktse@hku.hk | en_HK |
dc.identifier.authority | Maurice Tse, KS=rp01101 | en_HK |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1023/A:1008373205675 | - |
dc.identifier.scopus | eid_2-s2.0-34548072411 | en_HK |
dc.identifier.hkuros | 50076 | en_HK |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-34548072411&selection=ref&src=s&origin=recordpage | en_HK |
dc.identifier.volume | 15 | en_HK |
dc.identifier.issue | 3 | en_HK |
dc.identifier.spage | 195 | en_HK |
dc.identifier.epage | 216 | en_HK |
dc.publisher.place | United States | en_HK |
dc.identifier.scopusauthorid | Bowers, HM=16426977700 | en_HK |
dc.identifier.scopusauthorid | Moore, NH=24312747400 | en_HK |
dc.identifier.scopusauthorid | Maurice Tse, KS=7103352647 | en_HK |
dc.identifier.issnl | 0924-865X | - |