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A Reference Point Theory of Mergers and Acquisitions
Baker, Malcolm P. - 2010
The use of judgmental anchors or reference points in valuing corporations affects several basic aspects of merger and acquisition activity including offer prices, deal success, market reaction, and merger waves. Offer prices are biased towards the 52-week high, a highly salient but largely...
Persistent link: https://www.econbiz.de/10013149991
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Does Diversification Destroy Value? Evidence from Industry Shocks
Lamont, Owen A. - 2011
Does corporate diversification reduce shareholder value? Since firms endogenously choose to diversify, exogenous variation in diversification is necessary in order to draw inferences about the causal effect. We examine changes in the within-firm dispersion of industry investment, or diversity.'...
Persistent link: https://www.econbiz.de/10013125911
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Target Revaluation after Failed Takeover Attempts – Cash Versus Stock
Malmendier, Ulrike - 2012
Cash- and stock-financed takeover bids induce strikingly different target revaluations. We exploit detailed data on … unsuccessful takeover bids between 1980 and 2008, and show that targets of cash offers are revalued on average by +15% after deal … longer horizons. We find no evidence that future takeover activities or operational changes explain these differences. While …
Persistent link: https://www.econbiz.de/10013104060
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Wealth Destruction on a Massive Scale? A Study of Acquiring-Firm Returns in the Recent Merger Wave
Moeller, Sara B. - 2004
Acquiring-firm shareholders lost 12 cents at the announcement of acquisitions for every dollar spent on acquisitions for a total loss of $240 billion from 1998 through 2001, whereas they lost $7 billion in all of the 1980s, or 1.6 cents per dollar spent. Though the announcement losses to...
Persistent link: https://www.econbiz.de/10012785969
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Cross-Border Acquisitions and Target Firms' Performance : Evidence from Japanese Firm-Level Data
Fukao, Kyoji - 2010
Using Japanese firm-level data for the period from 1994-2002, this paper examines whether a firm is chosen as an acquisition target based on its productivity level, profitability and other characteristics and whether the performance of Japanese firms that were acquired by foreign firms improves...
Persistent link: https://www.econbiz.de/10012760742
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Cash-Out or Flame-Out! Opportunity Cost and Entrepreneurial Strategy : Theory, and Evidence from the Information Security Industry
Arora, Ashish; Nandkumar, Anand - 2021
We analyze how entrepreneurial opportunity cost conditions performance. We depart from the literature on entrepreneurship which identifies survival with performance. Instead, many entrepreneurs aim for a cash-out (IPO or acquisition), especially in innovation based industries. Striving for a...
Persistent link: https://www.econbiz.de/10013311941
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Buyout Activity : The Impact of Aggregate Discount Rates
Haddad, Valentin - 2016
Buyout booms form in response to declines in the aggregate risk premium. We document that the equity risk premium is the primary determinant of buyout activity rather than credit-specific conditions. We articulate a simple explanation for this phenomenon: a low risk premium increases the present...
Persistent link: https://www.econbiz.de/10012986691
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Financial vs. Strategic Buyers
Martos-Vila, Marc - 2013
This paper introduces the impact of debt misvaluation on merger and acquisition activity. Debt misvaluation helps explain the shifting dominance of financial acquirers (private equity firms) relative to strategic acquirers (operating companies). The effects of overvalued debt might seem limited...
Persistent link: https://www.econbiz.de/10013076914
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Do Buyouts (Still) Create Value?
Guo, Shourun - 2014
This paper examines whether, and how, leveraged buyouts from the most recent wave of public to private transactions created value. For a sample of 192 buyouts completed between 1990 and 2006, we show that these deals are somewhat more conservatively priced and lower levered than their...
Persistent link: https://www.econbiz.de/10012751381
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Agency Problems and the Fate of Capitalism
Morck, Randall - 2010
Economics has firms maximizing value and people maximizing utility, but firms are run by people. Agency theory concerns the mitigation of this internal contradiction in capitalism. Firms need charters, regulations and laws to restrain those entrusted with their governance, just as economies need...
Persistent link: https://www.econbiz.de/10013136737