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Author: Robert Chatt
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Languages : en
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This dissertation is composed of two essays regarding merger and acquisition (M&A) activity. The first takes a narrower view and makes use of merger and acquisition activity to assess governance faced by individual firms, while the second takes a broader view and investigates how labor market frictions impact overall merger and acquisition activity.The first essay examines how serving as trustee of a sponsor firms 401(k) assets alters the incentives of mutual fund companies to monitor firm behavior. The author uses the M&A decisions of firms to reveal the governance effort of mutual fund families serving as trustee. Over a sample of acquisitions announced between 1999-2013, the evidence presented shows that firms with mutual fund family trustees undertake lower quality mergers at higher frequencies. These firms are more likely to select private or diversifying targets, to pay with cash, and to complete the mergers they announce. This evidence suggests mutual fund families decrease their monitoring of retirement asset client firms. In the second essay, which is joint work with Matthew Gustafson and Adam Welker, the authors provide evidence on the nuanced effect of firing costs on U.S. M&A activity. Following the adoption of state laws that increase firing costs, there is an immediate increase in withdrawn deals and an immediate and persistent 30% reduction in M&A dollar volume, suggesting that post-merger employee turnover is a first-order source of value for large U.S. mergers. In contrast, small firms respond to firing costs by using the M&A market to reorganize into larger entities. There is no decline in small M&As. Instead, small M&As increase over time as average M&A size and the number of small firms decline.
Author: Robert Chatt
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ISBN:
Category :
Languages : en
Pages :
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Book Description
This dissertation is composed of two essays regarding merger and acquisition (M&A) activity. The first takes a narrower view and makes use of merger and acquisition activity to assess governance faced by individual firms, while the second takes a broader view and investigates how labor market frictions impact overall merger and acquisition activity.The first essay examines how serving as trustee of a sponsor firms 401(k) assets alters the incentives of mutual fund companies to monitor firm behavior. The author uses the M&A decisions of firms to reveal the governance effort of mutual fund families serving as trustee. Over a sample of acquisitions announced between 1999-2013, the evidence presented shows that firms with mutual fund family trustees undertake lower quality mergers at higher frequencies. These firms are more likely to select private or diversifying targets, to pay with cash, and to complete the mergers they announce. This evidence suggests mutual fund families decrease their monitoring of retirement asset client firms. In the second essay, which is joint work with Matthew Gustafson and Adam Welker, the authors provide evidence on the nuanced effect of firing costs on U.S. M&A activity. Following the adoption of state laws that increase firing costs, there is an immediate increase in withdrawn deals and an immediate and persistent 30% reduction in M&A dollar volume, suggesting that post-merger employee turnover is a first-order source of value for large U.S. mergers. In contrast, small firms respond to firing costs by using the M&A market to reorganize into larger entities. There is no decline in small M&As. Instead, small M&As increase over time as average M&A size and the number of small firms decline.
Author: Shaojie Lai
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ISBN:
Category : Consolidation and merger of corporations
Languages : en
Pages : 90
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More than $ 4.74 trillion has been spent on the corporate takeover in 2017. Mergers and Acquisitions (M&A) come in waves and their activity is cyclical by nature. For example, the M&A activity fell sharply in the 2008 financial crisis along with lower deal values and difficulties with financing. Given the importance of M&A events on the real economy, this dissertation primary focus on two important aspects of mergers and attempts to reconcile the issues in current studies in a short but precise manner. In the first chapter of my dissertation, I focus on the withdrawn deals. Numerous studies have examined complete M&A activities, but the literature on withdrawn acquisitions is scarce. About 20% of deals were withdrawn during 1981 to 2015. In the first chapter of this dissertation, I apply a comprehensive mergers and acquisitions withdrawal sample and find that target firms close to their 52-week high prices have lower withdrawal probabilities, larger withdrawal returns, longer withdrawal duration and tend to receive higher revisions of offering prices in renegotiation. In addition, the research herein identifies that the reference price ratios of the target firms have asymmetric effects between in-wave and out-wave withdrawn acquisitions. Chapter two of this dissertation examines the underlying motives for public bidders paying higher acquisition premia than private acquirers. A high short interest, proxy for overvaluation, has a significantly negative impact on the acquisition premium, especially among private bidders. Using a multiples-based market-to-book decomposition of Rhodes-Kropf et al. (2005), I find that acquisition premia of public acquirers are mainly affected by the target firm's misvaluation, while premia of private acquirers are not affected by the market-to-book components. In addition, I find that both firm and industry misvaluation have significant effects on the acquisition premia of public acquirers with lower level of institutional ownership, while the long-term growth has a significant effect on the premia paid by public acquirers with higher level of institutional ownership. This dissertation contributes to the literature by illustrating the importance and uniqueness of withdrawn deals and private bidders in the M&A process.
Author: Dongnyoung Kim
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Category :
Languages : en
Pages :
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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.
Author: Bernard Allen Kemp
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ISBN:
Category : Business & Economics
Languages : en
Pages : 108
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Author: Ning Jia
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Category :
Languages : en
Pages : 0
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Author: Fernan Restrepo
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ISBN:
Category :
Languages : en
Pages : 108
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Author: Stefan Ebner
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Category :
Languages : en
Pages : 344
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Author: Haoyu Li
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Category :
Languages : en
Pages :
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Author: Chune Young Chung
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ISBN: 9781267476524
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Languages : en
Pages :
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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.
Author: Vusal Eminli
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ISBN:
Category :
Languages : en
Pages : 0
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