An Empirical Test of the Redistribution Effect in Pure Exchange Mergers

Merger transactions involve differing degrees of change in capital structure and asset distribution. As a result, different forms of merger could have different effects on security values of the firms involved. Previous empirical studies primarily used samples that included all types of mergers. The present study examines the effect of one type of merger, pure stock exchange, on the values of the debt and equity of the firms involved.