The prevailing perspective is that higher debt levels should positively influence acquisition performance because debt disciplines managers by limiting their ability to allocate financial resources to unproductive uses and by motivating them to work harder. However, an alternative perspective, based on the availability of critical resources and management risk balancing, suggests a negative relationship. We develop this alternative perspective and test it with a very large sample of acquisitions over a long time frame. We find that pre-announcement acquirer leverage and post-acquisition change in combined leverage are both detrimental to post-acquisition performance.
|State||Published - 2008|
|Event||68th Annual Meeting of the Academy of Management, AOM 2008 - Anaheim, CA, United States|
Duration: Aug 8 2008 → Aug 13 2008
|Conference||68th Annual Meeting of the Academy of Management, AOM 2008|
|Period||08/8/08 → 08/13/08|
- Mergers and acquisitions