| In Essay I, I analyze the impact of the target and bidder reference points on the probability of acquisition under general economic conditions as well as in strong/weak economic periods. I find that the target and the bidder reference points have a significant impact on the probability of a firm becoming a bidder or a target. While the target reference point also has a significant impact on the successful completion of the merger, the bidder reference point does not. In addition, I find that the target reference point is a significant determinant of management-led buyout mergers, while the bidder reference point has a significant impact on the probability of the bidder launching a hostile bid.;In Essay II, I focus on the impact of the target and bidder reference points on the method of payment in the context of what the target seeks, what the bidder offers, and what the two parties use as their final method of payment. The analysis is performed under general economic conditions and in strong/weak economic periods. I find that while the target reference point has a strong impact on the method of payment agreed upon between the two parties, the bidder reference point does not. This is especially important given that the bidder reference point influences the consideration offered by the bidder but does not translate into a significant impact on the final method of payment.;In essay III, I examine the impact of bidder reference point on public targets and the impact of bidder and target reference points on private firms. I analyze the aforementioned relationships under different economic conditions. Consistent with the literature on premium and public targets, I find that the target reference point has a strong and positive relationship with the premium paid for private firms. The relationship is stronger in weak economic times. At the same time, I do not find any evidence that the bidder reference point exerts a significant influence on the premium paid for public firms. Interestingly, the relationship between the bidder reference point and the premium paid for private firms is negative and significant. |
