Post-Merger and Acquisition Performance and Risk Factors: An International Study

The Journal of Risk Management. 31(3):29-66. dx.doi.org/10.21480/tjrm.31.3.202009.002

38 Pages Posted: 23 Jun 2020 Last revised: 8 Oct 2020

Date Written: September 30, 2020

Abstract

After the completion of a merger and acquisition (M&A), a number of factors may affect the performance, probability of default and actual delisting of the acquirer. In this paper, we present a simple methodology for identifying risk factors and then proceed to identify and investigate deal-related factors which may pose a risk to the survival of the acquirer after a deal is closed. We find that the method of financing and the differences in industry are the main deal-level risk factors to an M&A deal after it closes as they are associated with low performance, high probability of default and high likelihood of performance-induced delisting of acquirers post-merger. We find no support for the ownership level of the acquirer and the time until deal completion as a potential risk factor.

Keywords: Post-M&A Performance, Probability of Default, Performance-induced Delisting

JEL Classification: G32, G33, G34

Suggested Citation

Thompson, Ephraim Kwashie and Kim, Changki, Post-Merger and Acquisition Performance and Risk Factors: An International Study (September 30, 2020). The Journal of Risk Management. 31(3):29-66. dx.doi.org/10.21480/tjrm.31.3.202009.002, Available at SSRN: https://ssrn.com/abstract=3614363 or http://dx.doi.org/10.2139/ssrn.3614363

Ephraim Kwashie Thompson

Korea University ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea

Changki Kim (Contact Author)

Korea University

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

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