The Effect of Acquisition on Leverage of Target Firms

This study examines the casual relationship between acquisition and the leverage ratios of unlisted target firms in four European countries, Ukraine, Bulgaria, France and Sweden during the period 2010 to 2016. Propensity score matching is used to control for selection bias. The results suggest that firms experience a significant increase in leverage ratio after acquisition and the results also show that domestic acquired firms have a stronger increase in leverage ratio compared with foreign acquired firms.