Decoupling by clienteles and by time in the financial markets: the case of two-stage stock-financed mergers

Ang, James S, Colak, Gӧnül and Zhang, Tai-Wei (2014) Decoupling by clienteles and by time in the financial markets: the case of two-stage stock-financed mergers. Journal of Corporate Finance, 25. pp. 360-375. ISSN 0929-1199

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Abstract

A two-stage stock-financed merger occurs when an acquiring firm first issues shares, and then engages in a cash acquisition shortly afterward. Such deals allow us to test two important hypotheses derived from decoupling: by clienteles via segmentation and by time. The acquirer's value is maximized by selling shares to investors preferring to hold them, and use the raised cash to pay the target shareholders (the decoupling by clienteles hypothesis). Two-stage deals also provide an option to the acquirers by allowing them to decouple their own shares from the correlated target's shares by issuing at an earlier date and wait for good acquisition opportunities (the time decoupling hypothesis). We find empirical evidence in support of both hypotheses.

Item Type: Article
Schools and Departments: University of Sussex Business School > Accounting and Finance
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 22 Feb 2022 10:10
Last Modified: 22 Feb 2022 10:15
URI: http://sro.sussex.ac.uk/id/eprint/104496

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