Download or read book Essays on Mergers Acquisitions and Corporate Investment written by Sangwon Lee and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays on mergers and acquisitions (M&As) and corporate investment. In the first essay, I examine the divergence of investor opinions about target firm values after the announcement of M&A deals ("investor disagreement"). I create three measures of investor disagreement using the target firm's trading volume, bid-ask spread, and stock return volatility during a two-week window following a deal announcement. I find that investor disagreement is positively associated with deal complexity, and negatively with the offer premium. Deals with larger investor disagreement are more likely to be renegotiated, to feature slower completion time, and to fail, even after controlling for announcement returns and merger arbitrage spreads. Consistent with the divergence of opinion theory, a trading strategy that invests in target firms with low investor disagreement yields positive abnormal returns. Overall, my results highlight the importance of investor disagreement in predicting M&A outcomes. The second essay shows that M&A deals that are announced when the bidder's relative value (ratio of bidder's equity value to target's equity value) is closer to its 52-week high feature higher offer premium, lower (higher) announcement returns for the bidding (target) firm, and are more likely to fail, all else equal. Yet, bidders in such deals also experience large abnormal returns in the two-year period surrounding the announcement. Our results suggest that bidders strategically choose announcement timing to exploit relative misvaluation, and cast doubt on the idea that announcement returns represent the gains to long-term shareholders of bidding firms. In the third essay, I examine how the effect of uncertainty on capital investment varies between focused firms and conglomerate segments. One of the advantages of conglomeration is that segments have access to the conglomerate's internal capital market and are thus less likely to be financially constrained. Consistent with the idea that uncertainty exacerbates financial frictions, I find that industry-level uncertainty has a negative effect on the investment of focused firms but has no statistically significant effect on the investment of conglomerate segments. Further analysis suggests that corporate diversification may improve the efficiency of capital investment decisions under uncertainty.

Download or read book Essays in Mergers and Acquisitions written by Wenjing Ouyang and published by . This book was released on 2012 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: Advisor: Samuel Szewczyk.

Download or read book Three Essays on Mergers and Acquisitions Institutional Investment and Innovation written by Abdullah A. Alshwer and published by . This book was released on 2012 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Two Essays on Leverage Mergers and Acquisitions and Institutional Investors written by Chune Young Chung and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first essay of my dissertation, I study how bidders' appetite for financial and operating (expected and unexpected) leverage of targets affects merger activities, and whether this appetite varies through the business cycle. I document evidence that bidders have a time-varying appetite for targets' leverages through the business cycle. The effect of financial and operating leverage on the likelihood of becoming a target of a takeover, likelihood of becoming an acquirer, the takeover premium, the announcement CARs of bidders, and long-run BHARs of bidders all depend on the business cycle. The time-varying effects of leverage on merger decisions are consistent with the time-varying benefits of financial and operating leverage, and uniquely capture the well-known time-varying risk in corporate investments.

Download or read book Essays on Corporate Investment written by Albert W. Sheen and published by . This book was released on 2009 with total page 190 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on International Corporate Diversification and Mergers and Acquisitions written by Yee Jin Jang and published by . This book was released on 2013 with total page 209 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: In this dissertation, I explore how the organizational structure of firms impacts corporate financing and investment decisions. I focus on the geographic structure of firms across countries in the first and second essays and changes in boundaries of firms through acquisitions in the third essay.

Download or read book Essays on Mergers and Acquisitions Investment Banking and Divestitures written by Quingzhong Ma and published by . This book was released on 2006 with total page 246 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Selected Essays on the Success of Mergers and Acquisitions written by Maximilian Keisers and published by Europäische Hochschulschriften / European University Studies / Publications Universitaires Européennes. This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study consists of three essays that analyze mergers and acquisitions (M&A) in the banking and REIT industries. Each of them aims to fill a gap in existing research literature. The first essay examines four case studies on the success of mergers in the German public banking sector. The second analyzes wealth effects of European cross-border M&A in the banking industry for bidder and target shareholders; it also assesses the effects of applying the same transactions on a large sample of European rivals. The third essay investigates wealth effects of international M&A in the REIT industry for bidder and target.

Download or read book Essays on Mergers and Acquisitions Investment Banking and Divestitures written by Qingzhong Ma and published by . This book was released on 2000 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Selected Essays in Empirical Asset Pricing written by Christian Funke and published by Springer Science & Business Media. This book was released on 2008-09-15 with total page 123 pages. Available in PDF, EPUB and Kindle. Book excerpt: Christian Funke aims at developing a better understanding of a central asset pricing issue: the stock price discovery process in capital markets. Using U.S. capital market data, he investigates the importance of mergers and acquisitions (M&A) for stock prices and examines economic links between customer and supplier firms. The empirical investigations document return predictability and show that capital markets are not perfectly efficient.

Download or read book Three Essays on Mergers and Acquisitions written by Nabil El Meslmani and published by . This book was released on 2017 with total page 390 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three essays. In the first essay, we examine the behavior of the implied volatility of both target and acquirer firms around merger and acquisition announcements. We find that option implied volatility is related to the bidder firm’s announcement cumulative abnormal return (CAR-Bidder), the choice of the method of payment as well as the probability that the deal will be concluded successfully. Specifically, we show that target implied volatility not only drops at the announcement day but moves towards the acquirer implied volatility post acquisition announcement for stock or mixed deals. Moreover, we find that the method of payment is related to the post announcement target implied volatility, and we document that target implied volatilities are lower in cash deals. The probability of deal success is significantly negatively affected by the spread between the actual target’s implied volatility two days after the announcement and its theoretical value. The greater the difference between the target’s implied volatility and its theoretical value, the lower the probability of successful deal completion. Next, we rely on the average of the implied volatility as a proxy for expected risk and the volatility of the implied volatility as a proxy for uncertainty about expected risk. We show that the CAR-Bidder decreases with an increase in both the expected risk and the uncertainty about expected risk of the bidder firm for stock or mixed deals. We also illustrate that the probability of a cash offer is decreasing in the expected risk and the uncertainty about expected risk of both bidder and target firms. We also find that the probability of deal success is decreasing in bidder’s expected risk. Our measures related to risk and uncertainty about risk contain information additional to common proxies for asymmetric information and uncertainty used in the literature such as the standard deviation of analysts’ forecasts and idiosyncratic volatility. The second essay examines whether the puzzling negative relationship between idiosyncratic volatility and next month performance is affected by the intensity of merger and acquisition (M&A) activity in the market. Our results show that the idiosyncratic volatility puzzle is stronger in periods of high M&A activity than in periods of low M&A activity. Further analysis shows that the negative relationship between idiosyncratic volatility and next month performance is the strongest in the high M&A activity sub-period spanning from 1982-1989. In contrast, M&A activity does not explain the negative relationship between the common factor in idiosyncratic volatility (CIV) and the next month’s performance. M&A activity can in part explain the idiosyncratic volatility puzzle, but it does not subsume the negative relationship between CIV exposure and firm returns.The third essay investigates how investor sentiment affects mergers and acquisitions. Our results show that periods of higher market sentiment are associated with a lower likelihood of observing a Cash-Only offer. We also find that for stock and mixed offers, periods of higher market sentiment are associated with lower bidder announcement returns, higher target bargaining power, and lower synergy. Our findings are consistent with Barker and Wu’s (2012) argument that associates periods of higher market sentiment with greater overpricing. These results are consistent with the argument that higher overpricing results in bidder firms opting for stock or mixed deals. However, this will also lead bidder investors to react more negatively to these non-cash offer announcements, target investors to bargain more if they are to be paid in stock (fully or partially), and the market to anticipate lower total synergy as the deal may be driven by the stock overpricing rather than the maximization of synergy. Next, we find that target firm runups are, on average, higher in periods of higher market sentiment. This relationship is not observed in the premium, which is unrelated to investor sentiment. The differing results of the runup and the premium is interesting as we expected to find a relationship between runup and premium similar to the markup pricing hypothesis of Schwert (1996). It appears that in periods of higher investor sentiment there is a higher runup potentially associated with the overreaction of optimistic investors. However, bidder firms’ management realize that this excessive runup is not an increase in the stand-alone value of the target firm and they price the deal accordingly.

Download or read book Essays in Mergers and Acquisitions written by Jie Wei and published by . This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: Merger and Acquisition market is a very active section of the financial market, involving multi-trillion dollar businesses every year. Extensive research has been done on this field, mostly focusing on the two parties of the trade, namely the acquirer and the target. However, the third party like deal advisors and risk arbitrageurs play very important roles in these transactions too. They not only get directly involved by negotiating the price and the terms, but also indirectly influence deal outcomes and facilitate price discovery by trading both party's equities. In the first part of this study, we focus on risk arbitrageurs. They participate the Mergers and Acquisitions games by providing the target shareholders a safe exit and make money from the speculative spread . But if and why risk arbitrageurs earn risk adjusted excess returns is a big unanswered question in the Mergers and Acquisitions literature. Our empirical study shows that deal characteristics, as well as market conditions affect risk arbitrageur's return. More importantly, after considering the liquidity risk (for which we use VIX as the proxy) Mergers and Acquisitions arbitrageurs are not making excess return. In the second part of this study, we turn our attention to financial advisors. We examine the effect of using boutique vs. full service investment banks as financial advisors on deal outcomes and shareholder's wealth in Mergers and Acquisitions transactions. Boutique investment banks are defined as independent financial advisors whose focus is Mergers and Acquisitions advising. This is the first paper to examine the role of financial advisors from this perspective. We find that deal size and target management's attitude towards the deal are important factors that affect acquirer's choice of boutique versus full service advisors. We also find that on average, boutique advisors achieve a higher deal success rate while it takes them a longer time to complete deals. Boutique bank's expertise in valuation is more appreciated than their independence by both the client and the market. They are better advisors in particular deals because of their expertise.

Download or read book Two Essays on Mergers and Acquisitions written by Dongnyoung Kim and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first essay, we examine the link between CEOs political ideology - conservatism - and their firms' investment decisions. We focus on the effect of CEO conservatism on M&A decisions. Our evidence indicates that politically conservative CEOs are less likely to engage in M&A activities. When they do undertake acquisitions, their firms are more likely to use cash as the method of payment, and the target firms are more likely to be public firms and to be from the same industry. Conditional on the merger, CEO conservatism appears to have a significantly positive impact on long-run firm valuation. However, we find no evidence that conservative CEOs create value in the short run. All our results hold after controlling for CEO overconfidence. In the second essay, we investigate the impact of difference in local political ideologies between acquirers and targets on the likelihood of deal completion and announcement returns over the period of 1981-2009. We posit that increase in political ideology distance between acquirer and target leads to greater risks/costs associated with the integration process. This increase in distance is less likely to allow for the completion of deals and elicit less favorable market response to merger announcements. We find that when political ideology distance between acquirer and target in a merger are minimal, deals are more likely to be completed. We also find that acquirer which are politically proximate to their targets earn significantly higher returns than distant acquirers. After controlling for the geographic effect and other determinants of announcement returns, the political ideology effect still exists. Overall, the evidence suggests that corporate political ideology plays an important role in completing deals and determining announcement returns.

Download or read book The Essays of Warren Buffett written by Lawrence A. Cunningham and published by Carolina Academic Press. This book was released on 2013-03-15 with total page 281 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the third edition of this international best seller, Lawrence Cunningham brings you the latest wisdom from Warren Buffett’s annual letters to Berkshire Hathaway shareholders. New material addresses: the financial crisis and its continuing implications for investors, managers and society; the housing bubble at the bottom of that crisis; the debt and derivatives excesses that fueled the crisis and how to deal with them; controlling risk and protecting reputation in corporate governance; Berkshire’s acquisition and operation of Burlington Northern Santa Fe; the role of oversight in heavily regulated industries; investment possibilities today; and weaknesses of popular option valuation models. Some other material has been rearranged to deepen the themes and lessons that the collection has always produced: Buffett’s “owner-related business principles” are in the prologue as a separate subject and valuation and accounting topics are spread over four instead of two sections and reordered to sharpen their payoff. Media coverage is available at the following links: Interviews/Podcasts: Motley Fool, click here. Money, Riches and Wealth, click here. Manual of Ideas, click here. Corporate Counsel, click here. Reviews: William J. Taylor, ABA Banking Journal, click here. Bob Morris, Blogging on Business, click here. Pamela Holmes, Saturday Evening Post, click here. Kevin M. LaCroix, D&O Diary, click here. Blog Posts: On Finance issues (Columbia University), click here. On Berkshire post-Buffett (Manual of Ideas), click here. On Publishing the book (Value Walk), click here. On Governance issues (Harvard University blog), click here. Featured Stories/Recommended Reading: Motley Fool, click here. Stock Market Blog, click here. Motley Fool Interviews with LAC at Berkshire's 2013 Annual Meeting Berkshire Businesses: Vastly Different, Same DNA, click here. Is Berkshire's Fat Wallet an Enemy to Its Success?, click here. Post-Buffett Berkshire: Same Question, Same Answer, click here. How a Disciplined Value Approach Works Across the Decades, click here. Through the Years: Constant Themes in Buffett's Letters, click here. Buffett's Single Greatest Accomplishment, click here. Where Buffett Is Finding Moats These Days, click here. How Buffett Has Changed Through the Years, click here. Speculating on Buffett's Next Acquisition, click here. Buffett Says “Chief Risk Officers” Are a Terrible Mistake, click here. Berkshire Without Buffett, click here.

Download or read book Essays on Corporate Finance written by Hari Prasad Adhikari and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We compare acquisition activity, method of payment choice, and the long-run value implications of acquisitions by newly public single-class and dual-class US companies. Our results show that dual-class IPO firms make relatively more acquisitions in innovative industries and are less likely to pay with stock as compared to single-class IPO firms. We provide evidence that the reluctance of dual-class firms to pay with stock is not related to the insiders' cash-flow rights but it is significantly positively related to the insiders' voting rights and wedge between the insiders' voting rights and cash-flow rights. We also find that acquiring dual-class IPOs perform better in the long-run than acquiring single-class IPO firms, and the better performance is mainly due to acquisitions in innovative industries. The results suggest that insiders of dual-class IPOs try to retain control during subsequent M&A activities. The governance structure in such firms allows them to make investments in high risk projects that enhance shareholder value in the long-run. Next, we examine the acquisition performance of family and non-family firms in the S&P 500 universe. Using style-adjusted and market-adjusted buy-and-hold returns (BHAR) and controlling for firm and merger characteristics, we find that the post-merger performance of family firms is significantly better than that of non-family firms. In particular, the mean one-year style-adjusted buy-and hold abnormal return is around 18% higher for family acquirers than for non-family acquirers. Further, contrary to the argument that founding family members make value-destroying diversifying acquisitions to minimize the risk of their personal portfolio, we do not find that family firms lose value in diversifying acquisitions. This result is consistent with Stein's model (1997) showing that diversification helps to reduce the cost of capital of the firm.

Download or read book Essays in Corporate Finance written by Nomalia Manna and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate strategies have always been an important part of the Finance literature. Firms and corporations constantly update their strategies and adopt new ways to combat the ever-changing market dynamics and reap benefits from various corporate activities. My thesis includes three essays that span over different strategies adopted by corporations and corporate boards to mitigate issues resulting from corporate deals, competition, and regulations. In the first essay, I examine if targets of serial acquirers retain or hire a specific type of financial advisors. Using pairwise matching between target firms and potential financial advisors, I find that 41% of firms targeted by serial acquirers use the financial advisor of a previous target of the same acquirer. After controlling for prior relations and reputation, I find that targets hire these advisors with a significantly higher likelihood than others. These targets earn higher returns and can complete deals sooner. On the other hand, serial acquirers suffer from lower returns. The results suggest that targets adopting this strategy of hiring "repeated advisors" gain an information advantage. The "repeated advisors" collect knowledge about the acquirers from prior deal negotiations and can transfer this information to the later targets. The results also provide a potential explanation for why serial acquirers perform poorly in their later deals. The second essay (with Sungjoung Kwon) studies the choices of corporate venturing by public corporations. While existing literature on corporate venture capital (CVC) primarily focuses on investments through CVC units, corporations frequently make investments in startups directly. We document that between 2000 and 2019, approximately 42% of deals made by U.S. public firms were through direct investments, and 90% of public firms with CVC units also made direct investments in startups. The agency hypothesis predicts that managers use direct investments to entrench themselves. In contrast, the organizational friction hypothesis posits that firms rely on direct investments to address immediate strategic goals. Our findings provide strong support for the organization friction hypothesis. Firms directly invest in startups whose operations are highly correlated with theirs and which are less likely to be potential investment targets of their CVC units. Using a difference-in-differences design around the introduction of Amazon Elastic Computer Cloud, we find that firms increase direct investments (but not investments through their CVC units) when the entry of startups increases. Overall, our findings shed light on choices of corporate venturing under different firm strategies. The final essay investigates the effects of merger objection lawsuits on acquirers and deal outcomes. In recent years these lawsuits have significantly increased in numbers, and a majority of them usually settle with the addition of more information to the proxy statements and substantive attorney fees. Since these settlements do not benefit the shareholders, most merger litigations are deemed as frivolous lawsuits in recent years. In response to this, in January 2016, Delaware Chancery Court introduced In re Trulia ruling, which states that the court will dismiss all lawsuits leading to "disclosure-only" settlements. This phenomenon lowered the massive volume of merger lawsuits faced by firms. Using this quasi-natural shock to the settlements of litigations, I find that acquirers incorporated in the states that adopted this ruling perform more acquisitions post-2016 and complete deals faster. I also find that such deals do not result in negative acquirer returns or higher offer premiums. Overall, the results indicate that this ruling provided some relief for the acquirers from the nuisance of the frivolous lawsuits.

Download or read book Essays in Mergers and Acquisitions written by Anh Luong Tran and published by . This book was released on 2010 with total page 328 pages. Available in PDF, EPUB and Kindle. Book excerpt: