Purchasing reserves and commodity market timing as takeover motives in the oil and gas industry
AbstractCan broad factors such as natural resources endowment and global commodity markets influence corporate takeovers? This paper theorizes that managers are motivated in mergers and acquisitions to purchase energy reserves and to time the commodity market in the oil and gas industry. We find supportive evidence that shows that energy reserves and prices cause and affect takeover activity, value, and performance. Acquirers are motivated to purchase reserves, while targets are motivated to sell based on market timing. Acquirers have negative takeover performance from lower risk. Our conclusions are robust to the traditional explanations: equity valuation, synergy, free cash flow, equity and debt market conditions, and economic cycles.
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Bibliographic InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 37 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/eneco
Takeovers; Mergers & acquisitions; Oil and gas industry; Oil reserves; Energy;
Find related papers by JEL classification:
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
- M20 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - General
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