Financial hedging and firm performance: evidence from cross-border mergers and acquisitions

Chen, Z., Han, B. and Zeng, Y. (2017) Financial hedging and firm performance: evidence from cross-border mergers and acquisitions. European Financial Management, 23 (3). pp. 415-458. ISSN 1468-036X doi: 10.1111/eufm.12103

Abstract/Summary

This paper studies the impact of financial hedging on firm performance in cross-border mergers and acquisitions (M&As). Using a sample of 1,369 acquisitions announced by S&P 1500 firms between 2000 and 2014, we find strong evidence that derivatives users experience higher announcement returns than nonusers, which translates into a $193.7 million shareholder gain for an average-sized acquirer. In addition, we find that acquirers with hedging programs have higher deal completion probabilities, longer deal completion time, and better long-term post-deal performance. We confirm our findings after employing an extensive array of models to address the potential endogeneity. Overall, our results provide new insights into a link between corporate financial hedging and firm performance.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/66219
Identification Number/DOI	10.1111/eufm.12103
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Wiley
Download/View statistics	View download statistics for this item