Business, Management and Accounting
4 years ago

Increased leverage after failed takeovers negatively impacts corporate performance, study finds.

RePEc: Research Papers in Economics
Debt, Debt Structure and Corporate Performance after Unsuccessful Takeovers: Evidence from Targets that Remain Independent
Tomas Jandik, Anil K. Makhija

Paper Summary

The article explores how companies change their debt levels and types after failed takeover attempts. It looks at whether increased debt signals a commitment to improve or just entrenchment by managers. The study finds that while higher debt levels usually hurt company performance, having more bank loans can offset this negative impact. So, overall, more debt is not always good for a company's success.

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