英文翻译译文修改5月22日.docVIP

Why do firms repurchase stock to acquire another firm Robin S. Wilber Published online: 3 August 2007 Abstract:This study investigates firms that repurchase their stock to finance an acquisition. Since research shows that cash-financed acquisitions perform better than stock financed acquisitions, why do firms that have available cash initiate the extra transactional step. I find these firms are well compensated for their efforts, especially in the long run. On average, these firms have negative abnormal returns prior to their repurchase announcements and thus may choose repurchasing to signal undervaluation. Furthermore, the stock acquisition step allows these firms to share risk, counteract the negative effects of dilution, and enjoy a tax advantage for their efforts. Keywords: Acquisitions Method of payment Repurchases 1 Introduction This study investigates the enigmatic decision by a firm to take on the extra transactional step to repurchase its shares with cash and then use those shares to finance an acquisition, rather than use the cash to directly finance the acquisition. It would seem to be far easier, if a firm has the cash available, to acquire the target firm with the cash. This is even more of an enigma when it is well known that cash offerings perform better than stock offerings. I find that firms that in a sample of 96 firms that repurchase shares to finance an acquisition from 1995–2002 are well compensated for their efforts. The most compelling argument as to why firms would take on the extra financing step is to achieve the best of both the stock-financing acquisitions and cash-financing acquisitions. These firms experience risk sharing with the target firms, counteract the negative effects of dilution by repurchasing shares first, and enjoy a tax advantage for their efforts. This is important to firms that want to use stock financing but are concerned about the historical negative returns of firms acquiring another firm with stock. Also this is