"Acquisition Payment Method and Post-Acquisition Leverage Adjustment: Evidence from Nordic M&A Transactions"

Sammanfattning

This study examines whether acquisition payment methods are associated with firms’ post-acquisition leverage adjustment behavior. More specifically, the study investigates whether cash-financed acquisitions influence firms’ adjustment toward target leverage differently compared to non-cash-financed acquisitions. The study focuses on Nordic mergers and acquisitions and is conceptually grounded in capital structure theories, particularly the target leverage and broader speed of adjustment (SOA) literature. The empirical analysis is based on secondary financial and transaction-level data collected from Refinitiv and Orbis. The sample consists of completed mergers and acquisitions involving Nordic acquiring firms. The study applies a quantitative research design using descriptive statistics, correlation analysis, and Ordinary Least Squares (OLS) regression models. Firms’ target leverage levels were first estimated using firm-specific financial characteristics commonly associated with capital structure decisions, after which post-acquisition leverage adjustment behavior was examined in relation to acquisition payment method. The findings suggest that firms in the sample appear to follow relatively systematic capital structure patterns. However, the results do not show a statistically significant relationship between cash-financed acquisitions and post-acquisition leverage adjustment. Instead, the findings indicate that firms’ structural financial characteristics, particularly asset tangibility, may play a more important role in explaining leverage behavior following acquisitions. Tangibility was positively associated both with firms’ estimated target leverage levels and with leverage adjustment behavior after acquisitions. The study contributes to the existing literature by combining target leverage concepts with post-acquisition financing behavior within a Nordic M&A context. The findings suggest that leverage adjustment following acquisitions may be more strongly associated with firms’ underlying financial structure and borrowing capacity than with acquisition payment method itself. Although the study is limited by a relatively small sample size and a simplified empirical framework, it provides additional insight into how firms manage leverage following major corporate transactions.