The Effect of Mergers and Acquisitions (M&A) on the Capital Structure in Food, Beauty and Tech Sectors
Keywords:leverage ratio, M&A, food, beauty, tech
This paper investigates the effect of Mergers and Acquisitions (M&A) on the capital structure of acquiring firms in food, beauty and tech industries. It also examines the influences of firm-specific factors and the 2007-2008 financial crisis on the leverage ratio. We employed panel data approaches for 14 companies in 3 sectors from 1995-2017. The result shows that corporate financing decision is significantly affected by profitability, tangibility, and size. When size increases, leverage ratio increases. However, profitability and tangibility have negative effects. In addition, the financial crisis is positively related to the leverage ratio, but we observe that financial crisis become insignificant with robustness checks. The finding of this study indicates that the capital structure of companies in food, beauty and tech sector has no direct relationship with the M&A activities of the company. However, after the financial crisis, the size and growth opportunities become significant.
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