Determinants of Control Premium on Emerging Markets

Student: Muravskyi Viktor

Educational Programme: Strategic Corporate Finance (Master)

Final Grade: 7

Year of Graduation: 2016

Estimation of control premium remains one of the main concerns in the financial literature: different approaches consider synergistic effects, agency problems, and the bargaining power of different agents. We estimated the determinants of control premium for emerging markets, in particular for China and India in the period 2006–2015. Using a linear regression model, we found that the determinants of the control premium for our sample are similar for other countries. The control premium was directly related with deal value. In addition, its level is higher in crisis. The control premium was inversely related to the target size, tangibility, market-to-book, leverage and acquired stake. The control premium decreases if the target company is in China or India, or if acquirer is a strategic investor. Moreover, we investigated control premium for China and India through all dummy variables.

Full text (added May 15, 2016)

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