Earticle

초록

영어

We test whether conglomerate mergers produce higher gains to shareholders due to corporate coinsurance than horizontal mergers by comparing the wealth change to shareholders around merger announcement. Conglomerate mergers show higher size-weighted average of bidder and target marginal tax rates than horizontal mergers. The higher marginal tax rates in conglomerate mergers provide extra returns to combined shareholders which vary from 0.23% to 0.46% according to model specification of coinsurance benefit to combined shareholders. We further investigate the change in financial leverage and cash holdings after merger completion to find the channel through which diversified firms make the most of higher marginal tax rates in comparison of specialized firms. The higher marginal tax rates help the consolidated firm to reduce cash holdings but do not have an impact on the leverage change after merger completion. Other coinsurance determinants such as sash flow correlation and volatility difference do not affect the change in subsequent change in both financial leverage and cash holdings. Our test results indicate that diversifying mergers of high bidder and target marginal tax rates enhance the stock value of both bidder and target firm around merger announcement and diversified firms realize this coinsurance benefit by reducing cash holdings rather than increasing financial leverage.

목차

Abstract
 1 Introduction
 2 Hypotheses development and test design
  2.1 Hypothesis development
  2.2 Test design
 3 Sample selection and Methodology
  3.1 Merger Sample
  3.2 Variable Construction
  3.3 Event study methodology
 4 The effect of corporate coinsurance on the wealth change to shareholders around merger announcement
  4.1 Merger sample
  4.2 Merger conditions of horizontal versus conglomerate mergers
  4.3 The impact of coinsurance determinants on the change in shareholder wealth around merger announcement
 5 The impact of coinsurance determinants on the change in leverage and cash holdings after merger completion
 6 Conclusion
 Appendices
 References
 Table

키워드

저자

• Hyeongsop Shim [ School of Business, Ulsan National Institute of Science and Technology, Ulsan 689-798, Republic of Korea. ]

참고문헌

발행기관

간행물

표지보기 관심저널 등록

• 간행물명

  한국재무학회 학술대회

• 간기

  부정기

• 수록기간

  2006~2024

• 십진분류

  KDC 325 DDC 330