IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v54y2019i6p2635-2661_12.html
   My bibliography  Save this article

Financial versus Strategic Buyers

Author

Listed:
  • Martos-Vila, Marc
  • Rhodes-Kropf, Matthew
  • Harford, Jarrad

Abstract

This article introduces the impact of debt misvaluation on merger and acquisition activity. We show the potential for debt misvaluation to help explain the shifting dominance of financial acquirers (private equity firms) relative to strategic acquirers (operating companies). Fundamental differences in governance and project coinsurance between the two types of acquirer would interact with debt misvaluation, resulting in variation in how assets are owned that depends on debt market conditions. We find support for our theory in merger data using a novel measure of debt misvaluation.

Suggested Citation

  • Martos-Vila, Marc & Rhodes-Kropf, Matthew & Harford, Jarrad, 2019. "Financial versus Strategic Buyers," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 54(6), pages 2635-2661, December.
    • Handle: RePEc:cup:jfinqa:v:54:y:2019:i:6:p:2635-2661_12
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0022109019000139/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jonathan Taglialatela & Roberto Barontini & Francesco Testa & Fabio Iraldo, 2024. "Blockholders and the ESG performance of M&A targets," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 28(2), pages 625-650, June.
    2. Carolina Salva & Xiqian Zhang, 2022. "Financial versus strategic bidders and underpricing as an acquisition motive," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(9-10), pages 1830-1862, October.
    3. Hege, Ulrich & Lovo, Stefano & Slovin, Myron B. & Sushka, Marie E., 2009. "Asset sales and the role of buyers: strategic buyers versus private equity," MPRA Paper 39549, University Library of Munich, Germany, revised Feb 2012.
    4. Chiarella, Carlo & Ostinelli, Diego, 2020. "Financial or strategic buyers: Who is at the gate?," International Review of Economics & Finance, Elsevier, vol. 67(C), pages 393-407.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:54:y:2019:i:6:p:2635-2661_12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jfq .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.