Download or read book Essays on Corporate Equity Transactions PHD written by Clifford Paul Stephens and published by . This book was released on 1996 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Corporate Equity Transactions written by James David Kelly and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Corporate Transactions written by Julian Gabler and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Corporate Finance written by Shikong Luo and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite the importance of understanding the interaction between financial markets and the real economy, the indirect effects of secondary markets on corporate outcomes, however, are not well understood. This dissertation comprises three essays that aim to shed some light on this issue by exploring the unintended consequences for firms in response to trading activities in equity and derivative markets. Uninformative stock price fluctuations induced by volatile mutual fund flows may inflict a hidden financial cost on firms. The first essay proposes a measure of stock-level passive equity mutual fund flow-induced volatility pressure and find it to positively affect bond yield spread at issuance through higher perceived risks revealed by increased equity volatility. Although flow-induced volatility is costly to the borrowing firm, it has no significant association with future firm fundamental risk, in contrast to equity volatility. This study empirically reveals a dark side of passive investing. The second essay examines the effects of options trading activities on corporate liquidity management. Based on a large sample of U.S. non-financial firms, it documents a positive relationship between equity options trading intensity and corporate cash holdings. Along with the instrumental variable approach, the CBOE's Penny Pilot Program as an exogenous shock and the extensive margin analysis using option listings corroborate a causality interpretation of the baseline results. The relationship is mainly driven by firms where financial distress risk is high and debt-financed investments are constrained by liquidity issues. Overall, these results suggest a precautionary saving motive due to active options markets that provide risk-shifting incentives to firms. During 2005-2007, SEC conducted a pilot program that relaxed short-selling restrictions. Using a difference-in-differences methodology and a hand-collected dataset of derivatives usage from a sample of U.S. oil and gas producing firms, the third essay finds a relative increase in hedging intensity among pilot firms compared to non-pilot firms during the pilot program period. This effect is stronger when firms face higher financial distress risk and when managers' incentives are more closely tied to firm value. These results indicate that managers are incentivized to smooth operating income due to concerns about a rise in the cost of financial distress under short-selling pressures.

Download or read book Essays on Top Management and Corporate Behavior written by Hui-Ting Wu and published by Rozenberg Publishers. This book was released on 2010 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Corporate Finance written by Rachel E. Gordon and published by . This book was released on 2015 with total page 314 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of one chapter studying the information possessed by outside directors before mergers and two chapters related to firms and their advisor relationships. The three essays in my dissertation explore various areas of corporate finance. My first paper titled "Are they in the know? Assessing outside director private information in M&A" examines trades by acquirer outside directors to test whether these directors are informed about upcoming mergers and whether they trade on this information for personal gain. Empirical evidence provides strong support of these hypotheses. Opportunistic trading in pre-merger months by outside directors is associated with the likelihood of a merger announcement and these trades appear correlated with deal quality. Outside directors sell shares before less valuable deals and purchase shares before more value-enhancing ones, suggesting that outside directors use their private information in self-serving ways. This relationship appears to be concentrated in harder to value firms and intensifies when a greater number of outside directors on the board trade in the same direction. Furthermore, there is evidence that this behavior occurs in firms with high levels of CEO power signifying that underlying agency problems may exist for some of these firms. The second essay titled "Why hire your rival? The case of bank debt underwriting," with David Becher and Jennifer Juergens, explores the previously undocumented debt underwriting relationship for financial firms. These firms are unique in that they are the only firms both able and capable of underwriting their own securities issuances. We find, however, that publicly traded investment and commercial banks ("banks") hire a rival in nearly 30% of all their debt issuances from 1979-2014. Further, the use of rivals is not limited to small, low ranked, or commercial banks as large, high quality, or investment banks also tend to engage rivals.Traditional (bank expertise and information sharing) as well as bank-specific (capacity constraints and limited distribution networks) motivations help explain why banks hire a rival. Evidence also suggests that the decision to use a rival to underwrite debt offerings affects fees. Collectively, these results expand our understanding of banks' underwriter choice and show that despite the potential costs, banks pervasively hire their rivals. The last essay titled "Are firm-advisor relationships valuable? A long-term perspective," with David Becher and Jennifer Juergens, examines long-term firm-advisor relations using an extended history of debt, equity, and merger transactions. Hard-to-value firms are more likely to maintain dedicated advisor relations (underwriters or merger advisors). Firms that retain predominantly one advisor over their entire transaction history pay higher underwriting/advisory fees, have inferior deal terms, and have lower analyst coverage relative to those that employ many advisors. When we condition on a firm's information environment as a catalyst for longterm advisor retention, riskier firms obtain better terms when they utilize a variety of advisors, but informationally-opaque firms do not. Our results suggest that only some firms benefit from long-term advisor retention.

Download or read book The Essays of Warren Buffett written by Warren Buffett and published by Cunningham Group. This book was released on 1998 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Two Essays on Corporate Finance written by Jie Lian and published by . This book was released on 2010 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two essays on corporate finance. Essay one examines whether corporate governance affects firm performance after capital investments. I find that among firms with weak corporate governance, those with high abnormal capital investments have significantly lower stock performance than those with low abnormal capital investments. In addition, a significant portion of the difference in abnormal stock performance between the two subgroups occurs around earnings announcements. In contrast, the level of abnormal capital investments is not related to subsequent stock performance or earnings announcement returns at firms with strong corporate governance. These findings indicate that corporate governance structure enhances firm value by mitigating the over-investment problem. Essay two examines how insider trading activity prior to seasoned equity offerings (SEOs) is related to subsequent investment, operating, and financing decisions of the issuer. I find that SEO firms with more abnormal insider sales issue more seasoned equity, hold more cash and increase dividend payouts more. They also perform more poorly. Following the SEO, these firms also issue less equity and the effects of the SEO on their capital structures gradually reverses. These findings suggest that SEO firms with more abnormal insider sales are more likely to have overpriced stock, while those with less abnormal insider sales are more likely to have good investment opportunities. Insider trading activity prior to the SEO provides valuable information about the firm's incentives to issue seasoned equity and help to predict the real activities of the issuer following the SEO.

Download or read book Private Equity and Corporate Control Transactions written by Robert P. Austin and published by . This book was released on 2008 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the recent past we have seen an explosion of business acquisitions and proposals by private equity firms. Acquisitions by private equity globally were valued at US$800 billion in 2006, and in Australia the average deal size increased 15-fold in that year. Private equity bids for the Coles and Qantas groups, though unsuccessful, attracted particular public attention. Public criticisms about alleged lack of accountability, high gearing of acquired businesses, and a perceived threat to jobs, have generally not been supported by governmental report in several countries. In Australia the Senate Standing Committee on Economics, which reported in August 2007, concluded by majority that there was no convincing case for further regulation. Legal issues about private equity acquisitions include questions of conflicts of interest for target company executives who join the private bidding consortium in the hope of personal rewards, and issues about whether it is consistent with their fiduciary duties for the target?s directors to cooperate with the private equity bidder?s desire for an agreed acquisition. Some Australian company boards have taken contrasting approaches to the question whether to disclose to the market a private equity approach before a concrete proposal is on the table. And acute questions arise if the private equity bidder proceeds by takeover bid rather then scheme and falls short of full control. The lack of liquidity following from the crisis in global credit markets in mid-2007 has slowed down private equity activity, facilitating reflection on these important questions. They were explored at a conference held in Sydney in August 2007 under the auspices of the Supreme Court of New South Wales and the Law Society of New South Wales. This book is, in part, an edited transcript of that conference. It also contains essays by the editors on the private equity phenomenon.

Download or read book Two Essays on Shelf registered Corporate Equity Offerings written by Don M. Autore and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Corporate Control and Capital Structure written by Erik Berglöf and published by . This book was released on 1991 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Corporate Finance written by Pavel Zryumov and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis studies the investment and financing decisions of firms in dynamic markets with asymmetric information. In the first chapter I analyze the effects of time-varying market conditions and endogenous entry on the equilibrium dynamics of markets plagued by adverse selection. I show that variation in gains from trade, stemming from market conditions, creates an option value and distorts liquidity when gains from trade are low. An improvement in market conditions triggers a wave of high-quality deals due to the preceding illiquidity and lack of incentives to signal quality. When gains from trade are high, the market is fully liquid; high prices and no delay in trade attract low-grade assets, and the average quality deteriorates. My analysis also reveals that illiquidity can act as a remedy as well as a cause of inefficiency: partial illiquidity allows for screening of assets and restores efficient entry incentives. I demonstrate model implications using several applications: early stage financing, initial public offerings, and private equity buyouts. Chapter 2, which is a joint work with Ilya Strebulaev and Haoxiang Zhu, reexamines the classic yet static information asymmetry model of Myers and Majluf (1984) in a fully dynamic market. A firm has access to an investment project and can finance it by debt or equity. The market learns the quality of the firm over time by observing cash flows generated by the firm's assets in place. In the dynamic equilibrium, the firm optimally delays investment, but investment eventually takes place. In a ``two-threshold'' equilibrium, a high-quality firm invests only if the market's belief goes above an optimal upper threshold, while a low-quality firm invests if the market's belief goes above the upper threshold or below a lower threshold. However, a different ``four-threshold'' equilibrium can emerge if cash flows are sufficiently volatile. Relatively risky growth options are optimally financed with equity, whereas relatively safe projects are financed with debt, in line with stylized facts. Finally, Chapter 3, which is based on an ongoing work with Ilya Strebulaev and Haoxiang Zhu, extends the analysis of Chapter 2 by allowing cash accumulation within the firm. We consider a firm whose managers possess superior information about the firm's value relative to the rest of the market and analyze the optimal timing of equity issuance. We show that equilibrium features socially inefficient, but privately optimal, delay of investment and equity financing of positive NPV projects. Waiting allows high quality firms to accumulate internal cash and increase investors' beliefs, therefore, reducing the cost of adverse selection. In the dynamic equilibrium low quality firms delay investment as well in hope of being mistaken for the high quality ones. However, when market beliefs are sufficiently low and/or internally accumulated level of cash is sufficiently high the low quality firm prefers to reveal itself.

Download or read book Essays on Corporate Governance and Investor Disagreement written by Tara Kumari Bhandari and published by . This book was released on 2013 with total page 102 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of two essays examining the roles of corporate governance and investor disagreement, respectively, in the performance and stock market valuations of firms. In the first chapter, I demonstrate that the relationship between corporate governance and firm performance varies with industry performance cycles. Firms with strong shareholder rights capture higher profits than poorly-governed firms in the same industry during highly profitable periods for the industry, but both groups have similar profits during weaker industry conditions. Analyst forecasts indicate that the pattern is expected, suggesting that the higher valuations of well-governed firms are due to this higher expected productivity in good times. Consistent with such expectations and with an updating of valuations as anticipated industry conditions change, positive abnormal stock returns to good governance are concentrated in periods of high industry returns, and are at least partially reversed during industry downturns. My results provide an alternative to learning and static risk theories in explaining the apparent abnormal returns to governance and their disappearance after 2001. In Chapter 2, I consider the impact of heterogeneous shareholder beliefs on stock prices, focusing on the context of corporate spin-offs and mergers. I extend theoretical work by Miller (1977) and Jarrow (1980) to show that when investors disagree about the prospects of different businesses and at least some of them are restricted from short-selling, the market price of an unseparable bundle of two enterprises will often be lower from the sum of the prices at which they would trade as standalone entities. Empirically, I construct a novel measure of observed disagreement that is informed by the theory and is less open to alternative interpretations than existing disagreement proxies. Consistent with the theory, I find that higher disagreement about the two components being either separated or joined is related to a positive return in the case of spin-offs and a negative return in stock mergers. Importantly, since I focus on returns on the ex date of these transactions, on which no new business information is released, these findings are unrelated to the expected business impact of the transactions.

Download or read book Essays on Corporate Takeovers written by Edward Podolski-Boczar and published by . This book was released on 2013 with total page 342 pages. Available in PDF, EPUB and Kindle. Book excerpt: The objective of this thesis is to examine the consequences of corporate takeovers on three distinct markets; namely, the equity market, the bonds market, and the options market. Corporate takeovers are some of the most significant corporate transactions that firms undertake in any given year, both in terms of size and strategic importance. As a consequence of their economic significance, takeovers have the potential to influence all corporate stakeholders. The existing literature on corporate takeovers, however, predominantly concentrates on the consequences for equity holders. This thesis expands this analysis to both the bonds market and the options market, on top of examining what effect cultural factors have on the equity markets response to takeovers. In addition to filling this gap in the literature, the thesis also deals with the question of the role of culture in corporate takeovers. The thesis consists of three distinct essays, with each essay concentrating on the link between corporate takeovers and a specific market. In essay 1, the link between religion-induced social norms and acquiring firm shareholder wealth is considered. Consistent with academic consensus across the sociology and religion studies fields, the prevalent religion of a geographic region is used as a proxy of attitudes towards change and diversity. Social identity theory postulates that both employees and top managers will be influenced by the prevailing attitudes, which can have significant economic consequences. The empirical analysis reveals that, indeed, acquirers located in more progressive regions where attitudes towards change are more positive tend to pursue takeovers which generate greater synergies and create more wealth for their shareholders. The observation that religion induced social norms influence synergy creation and wealth consequences for acquiring firm shareholders is significant, as it suggests that approaches beyond pure rational wealth maximization influence corporate decision making. The second essay considers the link between acquiring firm cash holdings and post takeover announcement bond returns. Examining this link in the context of corporate takeovers is significant, as it overcomes potential endogeneity problems stemming from reverse causality, but also sheds some light on the factors which affect bondholder response to takeovers. The essay considers the link between cash reserves and bondholder post-announcement returns, and whether shareholder power enhances the bond markets views of takeovers or not. The empirical analysis reveals that cash rich acquirers are viewed more negatively by acquirers than cash strapped acquirers. Furthermore, the negative effect that large cash reserves have on bondholder response to takeovers is exacerbated when shareholder oversight is weak. Consistent with the extant literature, these results are interpreted as showing that bondholders, like shareholders, are skeptical of the business decisions made by cash rich firms. Finally, the third essay considers whether the options market is an attractive trading venue for privately informed investors prior to takeover announcements, and whether the threat of a SEC investigation discourages trading in the options market. Corporate takeovers are an ideal setting to study the trading behavior of informed investors due to the inherently large information asymmetry between privately and publically informed investors, and due to the exceptionally large profits that these events offer. The options market is unique, in that it offers much higher potential profits but also a much higher probability of detection - anti-insider trading laws are therefore expected to be considerably more effective. The empirical analysis reveals that informed investors find the options market attractive prior to takeovers. Nevertheless, when the SEC is more likely to detect the informed trading activity, informed traders migrate to the equity market.

Download or read book Essays on Corporate Finance written by Noolee Kim and published by . This book was released on 2009 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Corporate Finance written by Xinye Zhang Liu and published by . This book was released on 2016 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three papers in corporate finance. Chapter 1 studies how mergers affect client relationship, using evidence from the investment banking industry. Our finding suggests that issuers, especially small ones, choose relationship underwriters to capitalize on relationship-specific assets and reduce the degree of underpricing. Bank mergers result in loss of relationship-specific capital, making the post-merger banks less attractive to the pre-merger banks relationship clients. The loss of relationship capital following bank mergers also results in more underpricing, especially for small issuers. Chapter 2 examine an important factor underlying the cross-sectional variation in CEO Pay-Performance Sensitivity(PPS): investor-manager disagreement. I characterize the optimal PPS when investors and managers have heterogeneous priors, and those priors affect project investment decisions, even under symmetric information. With a large sample, I find strong empirical evidence that CEO pay-performance sensitivity is decreasing with perceived investor-manager disagreement, and the magnitude of the association is economically important. Chapter 3 investigates the causal effects of involuntary delisting from a stock exchange on stock liquidity and long-term firm value. Focusing on firms in violation of NASDAQ continued listing rules between 2000 and 2009, I compare firms eventually delisted and moved trading of its stocks to Over-The-Counter (OTC) markets and those regained compliance and remained on NASDAQ. Market volatility during the delisting grace period is used as an instrumental variable (IV) for delisting outcome. My findings suggest large and negative delisting effect on trading volumes and the firms future access to public equity market; However, once selection is addressed, delisted stocks are no longer associated with higher transaction costs, lower analyst coverage or institutional ownership. My findings also suggest large cross-sectional difference based on a stocks pre-event trading volume: leaving NASDAQ for the OTC markets appear to be costly for previously actively-traded stocks but not the thinly-traded ones.

Download or read book Essays in Corporate Finance written by Kangzhen Xie and published by . This book was released on 2010 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the effects of information asymmetry, financial constraints and stock market valuation on the behavior of firms. The first essay explores the role of deal initiation and bidder asymmetry in determining the use of auction and target premia in merges and acquisitions. The second essay examines the behavior of the segments of conglomerates and single segment firms in the distressed industries. The third essay investigates the incentive of takeover arising from the temporary disparity of stock valuation. While half of all acquisition targets are sold in negotiated deals with only one buyer rather than by auction, the wealth effects for target shareholders are surprisingly similar in both auctions and negotiations. This begs the following questions: why do companies frequently avoid auctions and instead negotiate with just one buyer, and how can targets achieve comparable premia in negotiations? Drawing on Fishman's (1988) model of preemptive bidding and Povel and Singh's (2006) model of asymmetric bidders, I hypothesize that the sales procedure (i.e., auction or negotiation) is most likely determined by the party that initiates the deal. When an acquirer initiates a deal, it prefers a negotiated deal and hence agrees to pay a high premium to preempt the target and other potential bidders from running an auction. I document detailed information on the private bargaining process for 598 deals. I find that most negotiation deals are in fact initiated by the acquirers and that most of the target-initiated deals use an auction, which indicates that targets are using an auction as a mechanism to discover the highest bidder. Moreover, I provide evidence that the targets receive higher excess returns in the deals initiated by the acquirers than in the deals initiated by the targets. I also provide further evidence of preemptive bidding and bidder asymmetry by studying the indicative bids and the business relations between the targets and the acquirers. Hence, target firms are willing to forgo the potential benefits of an auction and agree to a negotiated deal because they are already facing a bidder with a high valuation and are able to get a high price. The second essay uses economic distress in an industry as a natural experiment and tests the alternate theories of conglomeration. We find that segments of conglomerates in distressed industries experience better performance than single segment firms. The distressed segments have higher sales growth, higher R & D expenditure and greater cash flows than single segment firms. Indicating greater financial constraints for single segment firms, the superior performance of segments of conglomerates is confined to the sub-sample of firms without credit ratings and for firms in competitive industries. Single-segment firms reduce their investment in non-cash current assets and significantly increase their cash holdings during periods of industry distress. There is some evidence that the single segment firms that accumulate cash also reduce their R & D expenditure. The diversification discount almost disappears in the years when one of the conglomerate segments is in distress. Overall, our evidence highlights the benefits of conglomerates in enabling segments to avoid financial constraints during periods of industry distress. The third essay studies the effect of valuation difference on merger incentives. There is widespread evidence that bidders are more highly valued than their targets, and that both parties tend to be in temporarily high-valued industries. We find that valuation differences are also extremely important in predicting who will be acquired and when. Our evidence also suggests that the driving force is more a desire to increase earnings per share the (the "bootstrap game" in the classic text of Brealey and Myers) than to exploit market mis-valuation. We find that a firm is more likely to be a target when others in the industry could acquire them in a stock-swap merger that appears accretive to the buyer while paying the target a substantial premium. The resulting measure is similar to the dispersion of valuation multiples within an industry, but is grounded in a specific model of managerial behavior and is empirically much stronger than dispersion. Indeed, it is stronger than any measure in the existing literature, including recent industry merger activity.