Three essays on mergers and acquisitions
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[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI SYSTEM AT REQUEST OF AUTHOR.] In this dissertation, I investigate two segments of the mergers and acquisitions (M&A) literature: serial acquirers and cross-border M&As. In the first essay presented in Chapter 1, I examine the phenomenon of declining announcement returns of serial acquirers. Using a classification of acquirers based on their patterns of acquisition, I find that decreasing returns occur mostly within "blocks" of acquisitions. This trend is driven by sprinters, bidders who acquire targets quickly in chunks. In contrast, I find no evidence of any such decline in returns for the most active acquirers in the market of corporate control: the marathoners. I test several theories proposed by prior literature to explain declining returns and find evidence consistent with temporary overvaluation, agency costs, and bidder learning as likely drivers. In the third essay presented in chapter 3, I investigate the impact of the cultural gap between the CEO of the acquiring firm and the CEO of the target firm in M&A deals. I find evidence that bidding CEOs are more likely to acquire targets led by CEOs with whom they have more cultural affinity, and that M&A deals are more likely to fail when the decision makers of both parties are culturally diverse. I find that higher levels of cultural heterogeneity are associated with more all-cash deals, a greater proportion of cash payments and a lower proportion of stock payment, consistent with cultural distance inducing mistrust between the partners. Moreover, I find evidence that partners are more likely to protect themselves against the risk of overvaluation of the other party when one or both are hard to value and CEO cultural heterogeneity is high.
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