The influence of debt on acquisition performance

Jeffrey S. Harrison, Derek Oler

Research output: Contribution to conferencePaperpeer-review

2 Scopus citations


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.

Original languageEnglish
StatePublished - 2008
Event68th Annual Meeting of the Academy of Management, AOM 2008 - Anaheim, CA, United States
Duration: Aug 8 2008Aug 13 2008


Conference68th Annual Meeting of the Academy of Management, AOM 2008
Country/TerritoryUnited States
CityAnaheim, CA


  • Debt
  • Mergers and acquisitions
  • Performance


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