Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/59314

Customer Concentration of Targets in Mergers and Acquisitions

File Size Format  
HARC_2019_paper_133.pdf 472.45 kB Adobe PDF View/Open

Item Summary

Title:Customer Concentration of Targets in Mergers and Acquisitions
Authors:Cheng, Mei
Jaggi, Jacob
Young, Spencer
Keywords:customer concentration
bid likelihood
bid payment method
Date Issued:30 Aug 2018
Abstract:We study how customer base concentration at a target firm impacts the occurrence and structure of M&A deals. We hypothesize that customer concentration increases information asymmetry and adverse selection between bidders and targets, such that (1) firms with greater customer concentration are less likely to receive a bid and (2) bidders for targets with greater customer concentration share the risk by using more stock payment in their offer. Using data on customer concentration and M&A deals from 1985 to 2016, we find consistent evidence supporting our predictions. Our findings extend the literature by systematically documenting an important factor in M&A decisions and by quantifying the economic consequences of customer concentration.
URI:http://hdl.handle.net/10125/59314
Appears in Collections: 18 Financial: Credit ratings/Intangible assets/other financial accounting issues


Please email libraryada-l@lists.hawaii.edu if you need this content in ADA-compliant format.

Items in ScholarSpace are protected by copyright, with all rights reserved, unless otherwise indicated.