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Derivatives Use, Information Asymmetry, and MNC Post-Acquisition Performance

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  • J. Barry Lin
  • Christos Pantzalis
  • Jung Chul Park

Abstract

"We utilize a sample of US acquiring firms that engaged in international M&As to document the effects of corporate derivatives use on post-M&A long-term performance. We find that derivatives users outperform nonusers. Furthermore, we find that acquirers with derivative policies that are more comprehensive and sophisticated outperform those with less comprehensive and sophisticated policies. They, in turn, outperform acquirers with no existing policies in place. Our results are consistent with the notion that the use of derivatives lowers information asymmetry related agency problems. Furthermore, our evidence indicates that derivatives use is an important corporate activity that has a profound effect on post-M&A performance." Copyright (c) 2009 Financial Management Association International.

Suggested Citation

  • J. Barry Lin & Christos Pantzalis & Jung Chul Park, 2009. "Derivatives Use, Information Asymmetry, and MNC Post-Acquisition Performance," Financial Management, Financial Management Association International, vol. 38(3), pages 631-661, September.
  • Handle: RePEc:bla:finmgt:v:38:y:2009:i:3:p:631-661
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    Cited by:

    1. Chansog Kim & Christos Pantzalis & Jung Chul Park, 2014. "Do Family Owners Use Firm Hedging Policy to Hedge Personal Undiversified Wealth Risk?," Financial Management, Financial Management Association International, vol. 43(2), pages 415-444, June.
    2. Kim, Huong Trang & Papanastassiou, Marina & Nguyen, Quang, 2017. "Multinationals and the impact of corruption on financial derivatives use and firm value: Evidence from East Asia," Journal of Multinational Financial Management, Elsevier, vol. 39(C), pages 39-59.

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