Article
Business, Finance
Gene Ambrocio, Gonul Colak, Iftekhar Hasan
Summary: This study investigates the impact of loan covenants associated with potential target firms on takeover deals, proposing two possible channels - discipline channel and constraint channel. The findings support the argument of the constraint channel, indicating that covenants restrict merger activity, leading to lower takeover likelihood, higher deal failure rate, increased likelihood of price renegotiation, and lower acquisition premium. Moreover, the tightness of covenants exacerbates these negative effects.
FINANCE RESEARCH LETTERS
(2022)
Article
Business, Finance
XiaoGang Bi
Summary: This study explores a unique corporate governance mechanism in Chinese state-owned enterprises - the co-existence of party committee and board of directors, and the monitoring effects of the party committee on value creation. The research finds that acquisitions with their own party committees create significantly higher market value for acquiring firms, especially for those with fewer external monitoring mechanisms.
INTERNATIONAL REVIEW OF FINANCIAL ANALYSIS
(2021)
Article
Business, Finance
Arash Dayani
Summary: This study examines the impact of patent-infringement claims by patent trolls on the acquisition of small firms. By exploiting the staggered adoption of state anti-patent troll laws, the study finds that these laws have two effects. Firstly, there is a decrease in the number of acquisitions of small firms after the adoption of these laws. Secondly, the anti-troll laws lead to an increase in the acquisition price for acquirers. The market reflects the increased acquisition cost through lower acquisition announcement returns. Larger firms respond to these laws by increasing their R&D efforts, replacing external innovation. By analyzing a sample of acquisitions that are not affected by the laws, the study disentangles alternative explanations.
JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS
(2023)
Article
Business, Finance
Vivek Pandey, Tanja Steigner, Ninon K. Sutton
Summary: This study investigates the impact of economic freedom on mergers and acquisitions (M&A) using a global sample of 6159 takeovers involving acquirers from 56 different countries and foreign targets from 130 countries. The findings suggest that acquirers with an economic freedom advantage over their targets achieve higher short-run and long-run abnormal returns after considering other important factors. Additionally, the level of economic freedom in the target country relative to the bidder country positively affects target shareholders' announcement wealth effects and merger premiums. These results contribute to institutional theory and highlight the significance of institutional quality in cross-border M&A.
INTERNATIONAL REVIEW OF ECONOMICS & FINANCE
(2023)
Article
Business, Finance
Ning Gao, Ni Peng, Yi Zhang
Summary: This study examines the distribution of efficiency gains between merging firms and their customer firms, finding that market power may prevent customers from enjoying the entire consumer surplus, indicating distributive inefficiency in horizontal mergers.
INTERNATIONAL REVIEW OF FINANCIAL ANALYSIS
(2021)
Article
Business
Francisco J. Martinez-Lopez, Changyuan Feng, Yangchun Li, Marc Sans
Summary: Relationships with consumers are critical to the success of online sellers. This article focuses on how online sellers deal with returns to improve buyer-seller relationships. It found that using an integrated return shipping method and offering free return shipping can improve consumer responses.
ELECTRONIC COMMERCE RESEARCH AND APPLICATIONS
(2022)
Article
Economics
Jose Lacerda, Paulo J. Pereira, Artur Rodrigues
Summary: This study finds that having a pre-bid minority ownership in the target firm can improve the acquirer's position in the takeover process by reducing information asymmetry. Toehold acquisitions are more likely to occur under conditions of low market uncertainty, low expected synergies, and high synergies uncertainty.
Article
Economics
Paul Voss, Marius Kulms
Summary: This paper identifies a benefit of separating ownership and control, which is typically the cause of inefficiencies in the theory of the firm. The separation leads to a separation of ownership and information, as insiders gain private information through control. The analysis shows that this separation is necessary for efficient trade in the market for corporate control, as strategic communication between inside and outside shareholders facilitates takeovers by eliciting private information from external bidders. Our results question the mandatory disclosure requirements during takeovers.
AMERICAN ECONOMIC REVIEW
(2022)
Article
Business, Finance
Tanveer Hussain, Gilberto Loureiro
Summary: This study examines the impact of target industry takeover competition on shareholder gains during mergers and acquisitions (M&As). The findings indicate that target industries with higher M&A activity have a negative effect on bidder announcement returns and a positive effect on target announcement returns, while the impact on bidder-target combined returns is minimal. Additionally, the study reveals that the decrease in bidder announcement returns due to higher industry takeover competition is mitigated when bidders come from countries with better institutional quality, suggesting that country governance can prevent overpayment by bidder managers to the targets.
JOURNAL OF INTERNATIONAL FINANCIAL MARKETS INSTITUTIONS & MONEY
(2023)
Article
Business, Finance
Leonidas G. Barbopoulos, Jo Danbolt
Summary: Earnouts address merger valuation risk by deferring payment and making it contingent on future targets' performance. Larger and older acquirers, foreign acquirers, and acquirers advised by top-tier or boutique advisors benefit more from earnout-based deals. Acquirers realize the highest returns when deferred payments are around 30% of deal value, which are larger after the SFAS 141(R) reform.
JOURNAL OF FINANCIAL RESEARCH
(2021)
Article
Business, Finance
Addis Gedefaw Birhanu, Philipp Geiler, Luc Renneboog, Yang Zhao
Summary: The study reveals that acquisition experience affects the remuneration contracts of directors, especially non-executive ones. Only directors with a track record of successful acquisitions are compensated, while experience that is already abundant in the firm is not. Various measures of acquisition experience were examined to confirm the findings, ruling out alternative explanations.
JOURNAL OF INTERNATIONAL FINANCIAL MARKETS INSTITUTIONS & MONEY
(2021)
Article
Engineering, Manufacturing
Yiming Li, Gang Li, Xiajun Amy Pan
Summary: We analyze return shipping insurance (RSI) policies on platforms like JD.com and Taobao.com, where retailers can offer RSI to consumers (RRSI) or allow consumers to purchase RSI themselves (CRSI). The decision to buy CRSI may be influenced by post-purchase regret. Our study investigates the optimal RSI policy for a monopolistic online retailer and insurer, finding that RRSI is offered when return handling costs are low and return shipping costs are moderate, while strong consumer propensity for regret drives the purchase of CRSI. Interestingly, under the optimal RRSI policy, the retailer charges higher prices but experiences expanded consumer demand, while the optimal CRSI policy results in lower prices but decreased demand. Counterintuitively, CRSI can be a win-win-win policy for retailers, insurers, and consumers.
PRODUCTION AND OPERATIONS MANAGEMENT
(2023)
Article
Business, Finance
Tobias Kellner
Summary: This study examines the short-term stock price reactions of target and acquiring companies after M&A announcements in the European Union. The results show that targets experience a significant increase in stock prices, while acquirers exhibit a minimal reaction. The highest stock price reactions are observed in merger cases, while partial acquisitions have the lowest reactions. UK targets demonstrate higher returns compared to continental firms. No evidence was found to support the overpayment hypothesis. The implications of the results for the efficient market hypothesis are mixed.
INTERNATIONAL REVIEW OF ECONOMICS & FINANCE
(2024)
Article
Economics
Benjamin Moll, Lukasz Rachel, Pascual Restrepo
Summary: New technologies benefit both high-skilled labor and capital owners in the form of higher capital incomes, leading to increased inequality. Automation increases inequality by raising returns to wealth, resulting in stagnant wages and incomes at the bottom of the distribution.
Article
Economics
Umar Farooq, Adeel Nasir, Bilal, Muhammad Umer Quddoos
Summary: Overall, the research indicates that COVID-19 had a negative impact on stock returns, especially for insurance companies operating in developing countries. The study also examines firm-specific determinants that differentiate the most affected insurance firms.
