Electronic Theses and Dissertations

Date of Award


Document Type


Degree Name

Ph.D. in Business Administration



First Advisor

M. Mark Walker

Second Advisor

William Chappell

Third Advisor

Andre Liebenberg

Relational Format



This dissertation consists of three essays on merger outcomes. In the first essay I classify mergers as value-increasing, neutral, or value-decreasing by measuring the change in the combined wealth of acquiring- and target-firm shareholders at the merger announcement date. I then test the role that strategic objectives and negotiation procedures play in driving value-increasing mergers. The results indicate that geographic expansion creates the largest combined increase in wealth. One-on-one negotiations correspond to greater increases in combined wealth, when compared to mergers that begin with auctions, third-party bids, or mutual discussions. The results of my study support both the strategic-alignment and targeted-synergistic-negotiation hypotheses. The second essay contributes to the literature by identifying novel proxies of bargaining power, such as the negotiation process and underlying deal motivations cited by management. By identifying five mutually exclusive negotiation procedures used to initiate a merger, I am able to simultaneously test theoretical predictions about sales procedure and bidding strategy. I find evidence that a one-on-one negotiation is preferable to an auction in the presence of information costs. Subsequently, I test the bargaining power hypothesis; which states that the strength of the acquiring and target managers’ bargaining positions drives the distribution of wealth. In mergers that start as auctions, the winning bidder captures the majority of wealth creation. I find that operational expertise provides a significant bargaining advantage for targets. However, acquirers capture the majority of wealth when merging with targets experiencing financial distress. The third essay uses the most recent financial crisis and subsequent recovery provide a natural experiment to test hypotheses related to value creation and distribution. I find three key results. First, the likelihood of a value-increasing merger was not correlated with market valuation, such that the proportion of value-increasing mergers did not increase during the Financial Crisis. Second, although there is some evidence that the frequency of unrelated mergers increased during the Financial Crisis, access to capital was the more critical deal motivation. Third, my results indicate that financially distressed targets had higher debt and lost considerable negotiating leverage during the financial crisis.


Emphasis: Finance

Included in

Finance Commons



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