Essays On Firms Behaviors And Efficiencies

In Chapter 1, we study the relationship between the target value creation and acquirer corporate governance measures. We show that, based on the 2-day, 5-day and 10day announcement windows, the targets acquired by companies with more antitakeover provisions (ATP) experience higher announcement returns. We also study the link between acquirer’s corporate governance measure and net synergistic effects on the capital market. We find that high-ATP acquirers engage in mergers that are not only destructive to their own firm values, but as a whole high-ATP acquirers also on average make acquisitions that yield lower net synergistic values. We also study the acquirer returns to confirm MWX’s results. Lastly, we examine the impacts of Gindices on combined company’s value changes in asymmetric windows, and we find the breakeven G-indices under which the net synergistic effects tend to be positive for different windows. In Chapter 2, we examine the relationship between various types of market shares and net interest margins in the Taiwanese banking industry. The study uses previously untapped Taiwanese banking data with more than 5000 observations and three model specifications over a 19-year span. The results show that the market shares have positive and statistically significant impacts on net interest margins for most aggregate samples. But the results also show that as the banking industry became saturated and banks began engaging in pricing wars and risky lending, the deposit and branch market shares have had negative impacts on bank spreads since 2001. The credit lending market share became a much more important factor for profitability; it was less important before around 2001 because (non-collateralized) credit lending was not as prevalent, and the market for credit cards or cash cards, which yield higher interest rates, was small. The results support the argument for further industry consolidation to build healthier and larger financial institutions.