This paper finds that investors learn from their experience with corporate fraud and financial misconduct and modify their investment behavior to avoid suspicious firms and increase corporate governance efforts. More specifically, mutual funds that experienced corporate fraud at one of their...

We develop a novel measure of target shareholders’ average purchase price (TAPP). In a sample of all U.S. public firm merger offers from 1990 to 2019, we find that: (1) the offer premium is positively correlated with the ratio of TAPP to the target’s pre-offer stock price; (2) TAPP dominates...

We explore the role of cultural heritage in explaining CEOs overconfidence and its impact on the propensity and performance of corporate acquisitions. CEOs are more prone to overconfidence if the culture in their ancestral country of origin is characterized by strong individualism, independence,...

Despite the mounting evidence that stock misvaluation affects takeover characteristics and outcomes at the deal level, there remains a prolonged debate over whether mispricing drives aggregate industry-level merger activity. We depart from the extant literature and investigate whether stock...

In this paper we investigate cognitive biases as a potential reason for the varied results of M&A in emerging capital markets. We focus on two cognitive biases, CEO overconfidence and availability bias, which significantly influence CEO behavior, encouraging them to be irrational in M&A deals....

This paper intends to scrutinize the Japan’s Corporate Governance Code from the perspective of its subtitle “sustainable growth of the company and improvement of medium- to long-term corporate value.” The first half of the paper focuses on the significance of this Code and related issues...

Using hand-collected data on CEOs’ personal assets, we find that CEOs prioritize corporate investment projects that increase the value of CEOs’ private assets. Such pet projects are implemented sooner, receive more capital, and are less likely to be dropped. This investment strategy delivers...

In July 2020, the European Commission published the “Study on directors’ duties and sustainable corporate governance” by EY. The Report purports to find evidence of debilitating short-termism in EU corporate governance and recommends many changes to support sustainable corporate...

This paper investigates whether executives with thrill-seeking tendencies engage in greater tax avoidance. Our results show a strong negative association between CEO thrill-seeking and a firm’s cash effective tax rate. We further find that thrill-seeking has a considerably stronger effect on...

We study the role of financial advisors in M&A for different advisor engagement constellations. We observe positive effects of both target and acquirer advisors on deal completion and prices. The unexpected positive price effect of acquirer advisors is further supported by evidence for higher...