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Article: Signaling, financial slack and corporate acquisitions

TitleSignaling, financial slack and corporate acquisitions
Authors
KeywordsAcquisitions
Asymmetric information
Financial slack
Signaling and net pension assets
Issue Date2000
PublisherSpringer 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?
AbstractThis 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 Identifierhttp://hdl.handle.net/10722/85683
ISSN
2015 SCImago Journal Rankings: 0.452
References

 

DC FieldValueLanguage
dc.contributor.authorBowers, HMen_HK
dc.contributor.authorMoore, NHen_HK
dc.contributor.authorMaurice Tse, KSen_HK
dc.date.accessioned2010-09-06T09:07:59Z-
dc.date.available2010-09-06T09:07:59Z-
dc.date.issued2000en_HK
dc.identifier.citationReview Of Quantitative Finance And Accounting, 2000, v. 15 n. 3, p. 195-216en_HK
dc.identifier.issn0924-865Xen_HK
dc.identifier.urihttp://hdl.handle.net/10722/85683-
dc.description.abstractThis 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.languageengen_HK
dc.publisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0924-865Xen_HK
dc.relation.ispartofReview of Quantitative Finance and Accountingen_HK
dc.subjectAcquisitionsen_HK
dc.subjectAsymmetric informationen_HK
dc.subjectFinancial slacken_HK
dc.subjectSignaling and net pension assetsen_HK
dc.titleSignaling, financial slack and corporate acquisitionsen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://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+Acquisitionsen_HK
dc.identifier.emailMaurice Tse, KS: ktse@hku.hken_HK
dc.identifier.authorityMaurice Tse, KS=rp01101en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1023/A:1008373205675-
dc.identifier.scopuseid_2-s2.0-34548072411en_HK
dc.identifier.hkuros50076en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-34548072411&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume15en_HK
dc.identifier.issue3en_HK
dc.identifier.spage195en_HK
dc.identifier.epage216en_HK
dc.publisher.placeUnited Statesen_HK
dc.identifier.scopusauthoridBowers, HM=16426977700en_HK
dc.identifier.scopusauthoridMoore, NH=24312747400en_HK
dc.identifier.scopusauthoridMaurice Tse, KS=7103352647en_HK

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