Three essays on corporate takeovers

Abstract

Within the research area of corporate takeover, understanding the drivers of the choice of payment method is significantly important. This is accrued to the fact that the choice of payment method can affect various aspects of the transaction including shareholders’ value. The choice of payment method in takeovers is mainly a function of both the asymmetric information between the acquirer and the target and the acquirer’s financial capability. This dissertation aims at advancing our knowledge with respect to the effects that different sources of information can have on the choice of payment method in takeovers. More specifically, I first develop two related studies examining the extent to which two important sources of information, firms’ annual reports and firms’ corporate social responsibility performance (CSR) ratings, influence the choice of payment method in takeovers. The first study aims to capture the effect of a more general and publicly available information and the second study aims to shed light on how a more specific and difficult to comprehend set of information affects the choice of payment method in takeovers. Furthermore, motivated by the fact that the choice of payment method has a material impact on the performance of the takeovers and therefore shareholders’ value, I develop the third paper investigating the potential influence that the acquirer’s board of directors and institutional ownership as monitoring mechanisms can have on the choice of payment method in takeovers.