Financing Mergers and Acquisitions

Abstract

The present doctoral thesis empirically examines financial issues surrounding mergers and acquisitions. My focus is on the change of the cost of capital caused by diversification and on the influence of a takeover's financial structure on the acquiring firm's performance. Starting with all sources of financing, the first part models the decision of how to finance a takeover and shows the corresponding value impacts. The second part investigates the influence of loan characteristics and explains the previously found payment effect with a financing effect. The third part disentangles the coinsurance effect and the diversification discount in the context of takeovers and provides evidence for their coexistence.