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Corporate control: The case of partial acquisitions

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Date Issued:
1996
Summary:
The form of the partial acquisition provides a unique opportunity to analyze the influence the partial acquirer has on the target firm which is not available in full acquisitions. This dissertation investigates how the subsequent decisions of both the partial acquirer and the partially acquired target affect their own stock valuations and the stock valuations of the other firm. Only partial acquisitions of less than 50% were considered so that the effect of corporate control without overt control could be measured. An event-study methodology is used to measure the stock price reactions of both firms to the announcement of several type of events: (1) acquisition/divestiture strategies, (2) dividend changes and (3) capital structure changes. The observed stock price reactions are then examined cross-sectionally to test whether firm-specific factors of explicit and implicit controls are influential in explaining the stock price reactions. A second goal of this dissertation was to measure the long term valuations of both firms and the combined entity to determine if the form of the partial acquisition is superior to that of a full acquisition. Again, various firm specific factors of explicit and implicit controls are tested cross-sectionally to determine their explanatory power on the long term valuations of both firms. The results of the event studies support the hypotheses that the actions of the partial acquirer do have an effect on the stock valuations of the partially acquired target (and vice versa) without the acquirer possessing a majority ownership position. In addition, several measures of explicit and implicit controls were found to be significant determinants of the short term stock valuations. The long term valuation studies implied that the form of the partial acquisition may not be superior to that of a full acquisition. However, it was determined that certain firm-specific factors (relatedness of the acquirer and target) have a significant effect on the long-term valuations for both firms.
Title: Corporate control: The case of partial acquisitions.
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Name(s): Spencer, Carolyn A.
Florida Atlantic University, Degree Grantor
Madura, Jeff, Thesis Advisor
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Issuance: monographic
Date Issued: 1996
Publisher: Florida Atlantic University
Place of Publication: Boca Raton, Fla.
Physical Form: application/pdf
Extent: 218 p.
Language(s): English
Summary: The form of the partial acquisition provides a unique opportunity to analyze the influence the partial acquirer has on the target firm which is not available in full acquisitions. This dissertation investigates how the subsequent decisions of both the partial acquirer and the partially acquired target affect their own stock valuations and the stock valuations of the other firm. Only partial acquisitions of less than 50% were considered so that the effect of corporate control without overt control could be measured. An event-study methodology is used to measure the stock price reactions of both firms to the announcement of several type of events: (1) acquisition/divestiture strategies, (2) dividend changes and (3) capital structure changes. The observed stock price reactions are then examined cross-sectionally to test whether firm-specific factors of explicit and implicit controls are influential in explaining the stock price reactions. A second goal of this dissertation was to measure the long term valuations of both firms and the combined entity to determine if the form of the partial acquisition is superior to that of a full acquisition. Again, various firm specific factors of explicit and implicit controls are tested cross-sectionally to determine their explanatory power on the long term valuations of both firms. The results of the event studies support the hypotheses that the actions of the partial acquirer do have an effect on the stock valuations of the partially acquired target (and vice versa) without the acquirer possessing a majority ownership position. In addition, several measures of explicit and implicit controls were found to be significant determinants of the short term stock valuations. The long term valuation studies implied that the form of the partial acquisition may not be superior to that of a full acquisition. However, it was determined that certain firm-specific factors (relatedness of the acquirer and target) have a significant effect on the long-term valuations for both firms.
Identifier: 9780591052909 (isbn), 12472 (digitool), FADT12472 (IID), fau:9366 (fedora)
Note(s): Thesis (Ph.D.)--Florida Atlantic University, 1996.
Subject(s): Consolidation and merger of corporations
Corporations--Finance
Investments
Held by: Florida Atlantic University Libraries
Persistent Link to This Record: http://purl.flvc.org/fcla/dt/12472
Sublocation: Digital Library
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Host Institution: FAU
Is Part of Series: Florida Atlantic University Digital Library Collections.