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  • The Impact of Financial Leverage of Target Company on Effectiveness of Cross-Border M&A Deals in Developing Countries

Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Anastasiia Antonova
The Impact of Financial Leverage of Target Company on Effectiveness of Cross-Border M&A Deals in Developing Countries
Strategic Corporate Finance
(Master’s programme)
2017
In this study 859 international M&A transactions initiated by BRICS companies (Brazil, Russia, India, China, South Africa) were analyzed in the context of the analysis of the effectiveness of M&A transactions. Based on the literature studied, a number of hypotheses was formed and tested. The results of the study made it possible to draw the following conclusions. First, the higher the debt level of the company, the higher the probability that it can become a target in an international merger and acquisition transaction. Secondly, the higher the financial leverage of the target company, the lower the short-term profitability of the buyer company. However, this conclusion is not sustainable within the varied event windows. Thirdly, it was revealed that in the period after the completion of the merger, the debt of the buyer company changes toward its optimal level.

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