Acquisitive Behaviour by Distressed Firms and its Impact on their Financial Distress A research on the impact of acquisitive behaviour by financially distressed firms on their financial distress through the lens of agency theory and performance feedback theory
Understanding the consequences of their acquisitive behaviour is all-important for every acquirer. In order to fill an existing gap in literature, this research investigates the impact of acquisitive behaviour by financially distressed firms on their financial distress through the lens of agency theory and performance feedback theory. The hypotheses were tested on a dataset with acquisitions from the time period 2001-2017, using a matched-pair sample of 33 acquirers and 33 non-acquisitive control firms. Using mixed ANOVA as well as regression, I find nonrobust support for the hypothesis that acquisitive behaviour by financially distressed firms is positively related to their financial distress and no significant support for the hypothesis that this relationship is moderated by negative attainment discrepancy. The potential moderating effect of agency problem on this relationship was regrettably not testable. Despite not finding significant and/or robust support for the hypotheses, this thesis still contributes to the novel exploration of the phenomenon that is the financially distressed acquirer.
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