Firms with high agency costs of overinvestment have significantly more positive dividend initiation announcement returns than other firms do. This paper presents the results from three experiments consistent with this conclusion: (i) dividend initiation announcement returns are significantly...

This paper examines the predictions of the performance based arbitrage hypothesis for the merger arbitrage market. Performance based arbitrage (Shleifer and Vishny (1997)) is the notion that funds under management are withdrawn from arbitrageurs following trading losses, resulting in inefficient...

This paper documents acquisition discounts for stand-alone private firms and subsidiaries of other firms (unlisted targets) of 15-30%, on average, relative to acquisition multiples for comparable publicly-traded targets. My results support the contention that acquisition discounts for unlisted...

Almost 20% of stock-swap merger bids contain collars that affect the payment received by target shareholders. I argue that a collar bid offers two sources of value to target shareholders: the basic offer premium and the value of the implicit collar options. I hypothesize that the market should...

I examine the motivation for, and effect of, including a collar in a merger agreement. The most important cross-sectional determinants of the bid structure (cash vs. stock, and whether to include a collar) are the market-related stock return standard deviations for the bidder and target. This...

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...