{"title":"Hiring High-Skilled Labor through Mergers and Acquisitions","authors":"Jun Chen, Shenje Hshieh, Feng Zhang","doi":"10.2139/ssrn.3820471","DOIUrl":"https://doi.org/10.2139/ssrn.3820471","url":null,"abstract":"In two natural experiments based on H-1B visa lotteries and a drastic cut in the annual H-1B visa quota, we document that firms respond to shortages in high-skilled workers by acquiring target firms that have these workers. Additional tests show that desire for the target's skilled workers is an important driver of these acquisitions. Acquirers that successfully obtain skilled workers from their targets outperform acquirers that withdraw their acquisition bids for exogenous reasons. Our findings suggest that skilled labor is a driver of acquisition decisions and a source of synergy gains.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127835734","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"M&A Advisor Misconduct: A Wrong Without a Remedy?","authors":"Andrew F. Tuch","doi":"10.2139/SSRN.3850956","DOIUrl":"https://doi.org/10.2139/SSRN.3850956","url":null,"abstract":"Merger and acquisition (\"M&A\") transactions are among the most high profile of corporate transactions. They are also among the most contentious, with around eighty percent of all completed deals litigated in recent years. And yet investment banks—essential advisors on these deals—have generally succeeded spectacularly in avoiding liability, an anomaly considering the routine nature of deal litigation and the frequency with which they face lawsuits in their other activities. This article examines this anomaly, explaining the doctrinal and practical reasons why it arises. In doing so, it puts in context aiding and abetting liability, a recently-successful shareholder strategy to bring M&A advisors to heel. The article shows how this litigation strategy—a direct action by shareholders alleging secondary liability against the corporation's M&A advisor based on the underlying wrong of directors—may delicately side-step the traditional obstacles. This strategy has succeeded on occasion, provoking widespread alarm in the investment banking community—but the strategy marks only a modest increase in liability risk for M&A advisors. In fact, the liability framework for M&A advisors remains piecemeal and unlikely to be effective in deterring M&A advisor misconduct. The article concludes by examining reform options, arguing in favor of greater industry self- regulation.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134244738","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A Case Study on Incitec Pivot’s Acquisition Strategy of Dyno Nobel","authors":"B. Balachandran, James Fazzino, Syed Shams","doi":"10.2139/ssrn.3625251","DOIUrl":"https://doi.org/10.2139/ssrn.3625251","url":null,"abstract":"We present a case study on Incitec Pivot Limited's (“IPL”) acquisition strategy during a major stock market swing to demonstrate how valuation aberrations can be leveraged to create long term value for shareholders. We discuss the management strategies, structures, and ideology of IPL and critically analyze its acquisition of Dyno Nobel Limited (“Dyno”). Furthermore, we highlight how IPL’s acquisition of Dyno transformed its business from an Australian based fertilizer company into the world’s 2nd largest explosives company - with operations in 13 countries, 21 major chemical facilities and around 5,000 employees.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"93 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122600827","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Learning about Uncertainty from Options Trading","authors":"Da‐Hea Kim, Sie Ting Lau, Bohui Zhang","doi":"10.2139/ssrn.3556977","DOIUrl":"https://doi.org/10.2139/ssrn.3556977","url":null,"abstract":"We hypothesize that managers can learn about a firm’s investment uncertainty from the equity options market. Using a US sample of 1,865 merger and acquisition attempts during 1996–2015, we show that the volatility implied from an acquiring firm’s equity options around an acquisition announcement negatively predicts the likelihood of acquisition attempts being completed. This negative impact is robust to controls for stock prices, alternative uncertainty proxies, and endogeneity tests. Moreover, we document three economic channels, finding that the effect of option implied volatility on deal completion is stronger among acquirers in which disinvestment is more difficult, whose managers are more susceptible to risk aversion, and whose options market is expected to have more information. Our findings suggest that options trading functions as a feedback mechanism to help managers learn about riskiness when making investment decisions.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121102699","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"CEO-CFO Educational Ties and Mergers and Acquisitions","authors":"François Belot, Timothée Waxin","doi":"10.2139/ssrn.3422172","DOIUrl":"https://doi.org/10.2139/ssrn.3422172","url":null,"abstract":"This paper analyzes the social connections between a firm’s chief executive officer (CEO) and its chief financial officer (CFO). We focus on French educational networks and examine the corporate governance and performance of firms whose CEO and CFO attended the same elite college (Grande ecole). Given the strong involvement of CEOs and CFOs in the takeover process, we investigate acquisition policies and observe that strong social ties within the top management team are associated with higher acquisitiveness and lower returns for bidder shareholders. These results are consistent with excessive managerial homogeneity reducing CEO monitoring and reinforcing decisional biases such as overconfidence. We find that CEOs are more likely to choose socially connected CFOs when CEOs are more powerful and are employed at firms with lower board monitoring. We also show that CEOs are less likely to be fired when the firms’ CFOs are drawn from the same network. These results suggest that social connections within executive committees come at the cost of CEO entrenchment and corporate governance failures.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133616132","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"When Shareholders Disagree: Trading After Shareholder Meetings","authors":"S. Li, Ernst Maug, Miriam Schwartz-Ziv","doi":"10.2139/ssrn.3095745","DOIUrl":"https://doi.org/10.2139/ssrn.3095745","url":null,"abstract":"\u0000 This paper analyzes how trading after shareholder meetings changes the composition of the shareholder base. Analyzing daily trades, we find that mutual funds reduce their holdings if their votes are opposed to the voting outcome. Trading volume is high even when stock prices do not change, peaks on the meeting date, and remains high up to four weeks after shareholder meetings. The results support models based on differences of opinion that predict that shareholders’ beliefs may diverge more after observing voting outcomes. Hence, trading after meetings creates a more homogeneous shareholder base, which has important implications for corporate governance.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121562200","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"EPS-Sensitivity and Mergers","authors":"S. Dasgupta, J. Harford, Fangyuan Ma","doi":"10.2139/ssrn.3317922","DOIUrl":"https://doi.org/10.2139/ssrn.3317922","url":null,"abstract":"Announcements of mergers where the target is offered stock very often discuss the impact of the deal on the acquirer’s earnings per share (EPS), especially when the deal is EPS-accretive for the acquirer. In this paper, we document that the acquirer’s EPS-sensitivity affects how deals are structured, the premium that is paid, and the types of deals that are done. We provide evidence that acquirer managers prefer to do EPS-accretive deals when (a) shareholder approval is required for deals (b) institutional investor horizon is shorter, and (c) managers’ compensation is tied to EPS. Our results suggest that the relative popularity of deals financed in cash since early 2000 could be a consequence of acquirers’ EPS-sensitivity and low value-multiple acquirers pursuing high value-multiple targets.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126187514","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Going Public in China: Reverse Mergers versus IPOs","authors":"Charles M. C. Lee, Yuanyu Qu, Tao Shen","doi":"10.2139/ssrn.3140281","DOIUrl":"https://doi.org/10.2139/ssrn.3140281","url":null,"abstract":"We study firms' choice to go public through reverse mergers (RMs) versus initial public offerings (IPOs) in a regime with strict entry regulations. Using a manually-assembled data set from China, we show that Chinese RM firms are larger and more profitable than IPO firms prior to public listing. Chinese RM firms also have superior post-listing performance, in terms of both operations and stock returns, compared to IPOs matched on industry and size. Unlike IPOs, Chinese RM firms do not underperform the market in the long run. These results are in sharp contrast to the evidence on RMs from developed countries. We trace these differences to China's stringent IPO policies, which appear to block even high-quality firms from accessing public markets.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134036907","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Foreign Competition and Acquisitions","authors":"S. Srinivasan","doi":"10.2139/ssrn.3049949","DOIUrl":"https://doi.org/10.2139/ssrn.3049949","url":null,"abstract":"Abstract I provide evidence on the impact of foreign competition on firms' propensities to engage in mergers and acquisitions. Using import tariff reductions as exogenous shocks that increase foreign competition, I find that affected firms are more likely to make acquisitions following tariff reductions. Cross-sectional tests show that this association is more pronounced for single segment firms, capital intensive firms, firms with higher profit margins, and firms with better growth opportunities, which suggests that this association is stronger for firms that are affected by increased competition to a greater extent and firms that stand to gain more from acquisitions when faced with increased competition. Moreover, the positive relation between acquisition propensities and tariff cuts is more pronounced for financially unconstrained firms and during times of high capital liquidity, which implies that it is easier for firms with greater access to capital to respond to increases in foreign competition by making acquisitions. Finally, I find some evidence that the acquisitions made in response to tariff decreases are associated with better firm profitability ratios in the following year, indicating that firms respond to increased competition by making acquisitions to improve their operational efficiency.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128225417","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Hostile Activism: Hostile Tactics or Hostile Hedge Funds?","authors":"Hugo E Benedetti","doi":"10.2139/ssrn.2951146","DOIUrl":"https://doi.org/10.2139/ssrn.2951146","url":null,"abstract":"I examine reputation building by activist hedge funds and document two new findings regarding hostile activism. First, there is evidence of a permanent reputation effect to hostile activism. Activist hedge funds that have engaged in hostile tactics, receive on average a 3% higher CAR [-10,+10] on their subsequent non-hostile campaigns, compared to hedge funds that have never engaged in hostile tactics. This abnormal return is positively related to the level of hostile reputation of the activist hedge fund. Second, I find that activist hedge funds with higher hostile reputation modify their non-hostile activism style to engage “hostile-like” targets and pursue “hostile-like” objectives, but withhold the use of explicitly hostile tactics. These findings imply that 1) hedge funds are able to build a hostile reputation using their past engagement tactics and that 2) market participants perceive and value such reputation as evidenced by the higher announcement return observed in the hedge fund’s targets.","PeriodicalId":426016,"journal":{"name":"CGN: Other Corporate Governance: Acquisitions","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132818709","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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