Strategic Decisions, Default Risk, and Equity Returns.
Date Issued
2006
Date
2006
Author(s)
Huang, Wei-Ju
DOI
en-US
Abstract
Employing Liao and Chen’s (2005) Market-based Net Synergy model (MNS model), we explore empirically the relationship between the strategic decisions of a firm and its default risk and equity returns. We also investigate the factors influencing these decisions. Our empirical results show that strategic activities positively affect not only the equity’s cumulative abnormal returns but also the acquiring firm’s debt distance to default. Furthermore, we find that in a merger activity the net synergy return can be explained by the relative stock price, the relative leverage between the acquirer and the target firm, and the project net costs per unit transaction value.
Subjects
策略性決策
違約風險
股權報酬
Strategic decisions
Default risk
Equity returns
Type
thesis
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