The paper provides evidence on the effects of including a target termination fee in a merger contract. I test the implications of the hypothesis that termination fees are used by self-interested target managers to deter competing bids and protect quot;sweetheartquot; deals with white knight...

We investigate the role of intellectual property rights protection in cross-border merger and acquisition (M&A) activity. We document a significant increase in inbound cross-border M&As after a country implements reforms that strengthen local intellectual property rights. Importantly, we find...

This paper examines the incentive effects of a mandatory personal deductible in liability insurance contracts for directors and officers (D&Os). Exploiting a novel German law that mandates personal deductibles for executives, we document positive returns for affected firms around the first...

Many academic studies use fixed pre-announcement event days (such as -20, -42, or -63) to measure takeover premiums. In this paper, we show that the use of traditional fixed windows generates premiums that are underestimated by as much as eight percentage points. This downward bias is especially...

The monthly volatility of IPO initial returns is substantial, fluctuates dramatically over time, and is considerably larger during quot;hotquot; IPO markets. Consistent with IPO theory, the volatility of initial returns is higher among firms whose value is more difficult to estimate, i.e., among...

Extant research examines the extent to which bankruptcy has intra-industry valuation consequences. This study broadens the investigation by examining the wealth effects of distress and bankruptcy filing for suppliers and customers of filing firms. On average, important wealth effects occur prior...

The widely cited empirical relation between equity misvaluation and the choice of merger currency has been recently called into question in a substantive manner. How can it be that the academic community was misled by this spurious correlation for more than a decade? We investigate this question...

We provide evidence concerning the effect of managerial risk-taking incentives on merger and acquisition (M&A) decisions and outcomes for different types of mergers: vertical, horizontal, and diversifying. Using chief executive officer (CEO) relative inside leverage to proxy for the incentives...

We examine completed M&A deals with large acquirer shareholder dollar wealth gains at announcement. We find that large-gain acquisitions are (i) typically “bolt-on” deals that are small relative to the acquirer's size; (ii) transaction-specific events (not firm- nor CEO-specific events);...

Most extant studies consider golden parachutes as the totality of change-in-control payments. However, for the median CEO of firms listed in the S&P SmallCap 600 index in 2009, golden parachute payments are only 46% of total change-in-control compensation. We measure total change-in-control...