This thesis examines the impact of derivative usage on the decision of M&As and the return to the acquirers. I use a probit regression to estimate the likelihood of acquisition announcement for derivative users and non-users, and the result shows that derivative users are more likely to make acquisitions than non-users. Regarding the announcement returns, M&As made by derivative users are lower than non-users, but the result from OLS regressions shows no evidence that the difference is attributable to derivative usage. The possible explanation is that derivative usage reduces stock return volatility, therefore derivative usage does not surprise shareholders. Additional test on sub-samples does not show evidence that COVID-19 affects the relation between derivative usage and announcement returns. Finally, the probit regression on derivative usage and method of payment shows that derivative users are less likely to use pure cash payment in transactions. The result implies that derivative users may prefer external financing when undertaking M&AS.
|Date of Award
|16 Jun 2023
|Yilmaz Yildiz (Main Supervisor) & Aydin Ozkan (Co-Supervisor)