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Title: Three essays on mergers and acquisitions : deal initiation and insider trading
Author: Xia, Chunling
ISNI:       0000 0004 5915 9913
Awarding Body: University of Warwick
Current Institution: University of Warwick
Date of Award: 2015
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The thesis is composed of three essays on mergers and acquisitions: deal initiation and insider trading. Specifically, it tries to figure out the reasons and managers’ motivation concerning M&A deal initiation as well as analyze insiders’ trades in target and acquiring firms both before and after the takeover public announcement date. Chapter 2 shows that target versus bidder initiated deals differ in two main respects. First, target initiated deals have higher insider and CEO ownership that motivates the management to engage in the sale. Second, target initiated firms are more levered and seem to have higher growth options. This suggests that an important motivation behind the board’s decision to initiate a sale of their firm is to preserve growth options in a situation with potential financial distress. A complementary analysis shows larger differences between deal versus non-deal firms that remain publicly listed. In Chapter 3, we find that target insiders stop selling during 6 months immediately before the public announcement but do not stop selling in the early pre-announcement period. Moreover, we show that target insiders are stronger net buyers before the public announcement in informal sales, cash and financial deals. Furthermore, target insiders in stock deals do not stop selling even immediately before the public announcement, which supports the bidder overvaluation hypothesis. In addition, we find that target insiders change their trading patterns after the deal public announcement. Insiders are stronger net buyers in target initiated deals, formal auctions and cash deals. Chapter 4 shows that, overall, acquirer insiders decrease their purchases and sales to same extent during the 2 months immediately before the public announcement. Concerning deal characteristics, we show that acquirer insiders are stronger net buyers both before and after the announcement date in stock deals relatively to cash deals and in informal sales relatively to formal auctions. The two factors reinforcing each other. For informal sales, acquirer insiders are stronger net buyers in stock deals before the public announcement but change to cash deals after the public announcement.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HD61 Risk Management