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The Effect Of International Acquisitions on Firm Leverage

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  • Imed Chkir
  • Jean‐Claude Cosset

Abstract

To determine whether corporate international diversification leads firms to increase their leverage, we perform an event study that compares the leverage of corporations before and after they acquire foreign subsidiaries. We find that on average leverage increases from the first to the third year following the acquisition. When we examine the relation between additional debt financing after foreign acquisitions and the characteristics of these acquisitions, we find that in addition to such major determinants as size and profitability, debt financing is explained by geographical and industrial diversification effects.

Suggested Citation

  • Imed Chkir & Jean‐Claude Cosset, 2003. "The Effect Of International Acquisitions on Firm Leverage," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 26(4), pages 501-515, December.
    • Handle: RePEc:bla:jfnres:v:26:y:2003:i:4:p:501-515
    DOI: 10.1111/1475-6803.00071
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    Cited by:

    1. Cappa, Francesco & Cetrini, Giorgio & Oriani, Raffaele, 2020. "The impact of corporate strategy on capital structure: evidence from Italian listed firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 379-385.

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