Financial Hedging and Firm Performance: Evidence from Cross-border Mergers and Acquisitions

Chen, Zhong; Han, Bo; Zeng, Yeqin

doi:10.1111/eufm.12103

Financial Hedging and Firm Performance: Evidence from Cross-border Mergers and Acquisitions

Chen, Zhong; Han, Bo; Zeng, Yeqin

Authors

Zhong Chen

Bo Han

Dr Yeqin Zeng yeqin.zeng@durham.ac.uk
Associate Professor

Abstract

Using a sample of 1,369 cross‐border acquisitions announced by Standard & Poor's 1500 firms between 2000 and 2014, we find strong evidence that derivatives users experience higher announcement returns than non‐users, which translates into a US$ 193.7 million shareholder gain for an average‐sized acquirer. In addition, we find that acquirers with hedging programmes have higher deal completion probabilities, longer deal completion times, and better long‐term post‐deal performance. We confirm our findings after employing an extensive array of models to address potential endogeneity. Overall, our results provide new insights into a link between corporate financial hedging and firm performance.

Citation

Chen, Z., Han, B., & Zeng, Y. (2017). Financial Hedging and Firm Performance: Evidence from Cross-border Mergers and Acquisitions. European Financial Management, 23(3), 415-458. https://doi.org/10.1111/eufm.12103

Journal Article Type	Article
Acceptance Date	Jun 13, 2016
Online Publication Date	Nov 15, 2016
Publication Date	Jun 1, 2017
Deposit Date	Sep 21, 2018
Publicly Available Date	Nov 15, 2018
Journal	European Financial Management
Print ISSN	1354-7798
Electronic ISSN	1468-036X
Publisher	Wiley
Peer Reviewed	Peer Reviewed
Volume	23
Issue	3
Pages	415-458
DOI	https://doi.org/10.1111/eufm.12103
Public URL	https://durham-repository.worktribe.com/output/1313887
Related Public URLs	http://centaur.reading.ac.uk/66219/

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Copyright Statement
This is the accepted version of the following article: Chen, Zhong, Han, Bo & Zeng, Yeqin (2017). Financial Hedging and Firm Performance: Evidence from Cross-border Mergers and Acquisitions. European Financial Management 23(3): 415-458, which has been published in final form at https://doi.org/10.1111/eufm.12103. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.