Investors' decisions following acquisition announcements: A configurational analysis of the role of acquirers' resources, capabilities, and strategic fit with the target firm

2021 ◽  
Author(s):  
Ana Colovic ◽  
Olivier Lamotte ◽  
Jiachen Yang
Keyword(s):  
Target Firm ◽  
Strategic Fit ◽  
Configurational Analysis ◽  
Acquisition Announcements

The Importance of Blockholder Heterogeneity: Security Market Effects and Follow-On Activities

2018 ◽  
Vol 54 (1) ◽  
pp. 101-153 ◽  
Author(s):  
Jim Hsieh ◽  
Tao-Hsien Dolly King
Keyword(s):  
Hedge Funds ◽  
Security Market ◽  
Target Firm ◽  
Market Effects ◽  
Bond Returns ◽  
Target Firms ◽  
Performance Consequences ◽  
Private Placements ◽  
And Performance

Recent research on blockholders focuses on activist hedge funds and documents positive stock but negative bond returns. This study investigates the role of blockholder heterogeneity on security market effects and target firm follow-on activities across three important dimensions: identity, motive, and purchasing method. We show that target firms’ security returns and post-acquisition activities strongly correlate with blockholder heterogeneity. Further, bond returns are significantly positive for firms with blockholders’ debt-assistance motive while both stock and bond returns are significantly negative in private placements. Overall, our findings highlight the importance of blockholder heterogeneity on the valuation and performance consequences in block acquisitions.

Consumers’ reactions to cross-border acquisitions

2019 ◽  
Vol 122 (2) ◽  
pp. 655-677
Author(s):  
Riccardo Resciniti ◽  
Michela Matarazzo ◽  
Gabriele Baima
Keyword(s):  
Experimental Design ◽  
Corporate Reputation ◽  
Design Methodology ◽  
Consumer Perceptions ◽  
Psychic Distance ◽  
Target Firm ◽  
Content Type ◽  
Cross Border ◽  
Acquiring Firms

Purpose The purpose of this paper is to focus on consumers’ reactions to cross-border acquisitions (CBA) by exploring the role of consumer perceptions of the psychic distance between the country of the acquirer and that of the target firm when the acquiring corporation has a good or poor reputation. Design/methodology/approach A 2×2 experimental design which manipulated psychic distance and acquirer’s corporate reputation was conducted in Italy. The study considers an Italian food target firm and compares four foreign acquiring firms with different combinations of corporate reputation (good/poor) and psychic distance to Italy (small/large). Findings The authors found that the degree of psychic distance between the countries of the acquiring and targeted firms was inversely related to Italian consumers’ intentions to repurchase the products of the post-acquisition target, and unrelated to the acquirer’s corporate reputation. Originality/value This is the first study focusing on psychic distance in the context of CBA, especially from the perspective of consumer behavior, which can help to better understand certain negative reactions toward the acquisition of a business.

The role of toeholds on asymmetric information in mergers and acquisitions

2017 ◽  
Vol 34 (2) ◽  
pp. 260-280
Author(s):  
Sebouh Aintablian ◽  
Wissam El Khoury ◽  
Zouhaier M’Chirgui
Keyword(s):  
Asymmetric Information ◽  
Mergers And Acquisitions ◽  
Intangible Assets ◽  
Negative Relationship ◽  
Multinomial Logit Model ◽  
Target Firm ◽  
Content Type ◽  
Tender Offers ◽  
Asymmetry Of Information

Purpose This paper aims to examine empirically the role of toeholds in reducing asymmetric information in mergers and acquisitions by establishing a relationship between the toehold and some relevant characteristics of the acquiring and the target firm. Design/methodology/approach A regression analysis is conducted to examine the relation between the dependent variable (the toehold) and a set of independent variables. A multinomial logit model is used to test for the occurrence of toeholds. A probit selection model and two-step Heckman correction tests are used to correct the data and to check for robustness of the results. Findings The regression results for acquisitions with prior toeholds are consistent with the studied hypotheses that asymmetric information is more observed in foreign acquisitions, in different industries, with tender offers and with higher levels of intangible assets. A negative relationship is found between toehold size and the number of competing bidders. Originality/value Consistent with previous literature, the study finds that majority of bidders abstain from purchasing a toehold before entering a bid contest. The study also emphasizes the role of intangible assets in assessing the efficacy of toeholds under asymmetric information. The ratio of target intangible assets to target total serves as a proxy for asymmetric information. Regression results are consistent with the hypotheses that asymmetry of information is observed when the acquiring and the target firm operate in different countries and industries.

scholarly journals The Urge to Merge: The Role of Governance Structures in Mergers and Acquisitions

1970 ◽  
Vol 13 (2) ◽  
pp. 151-166
Author(s):  
Catherine Daily ◽  
Dan Dalton
Keyword(s):  
Decision Making ◽  
Mergers And Acquisitions ◽  
Board Of Directors ◽  
Board Composition ◽  
Outside Directors ◽  
Target Firm ◽  
Target Firms ◽  
The Board Of Directors ◽  
The Relationship

The 1990s have witnessed merger and acquisition activity which rivals that of the 1980s "merger mania." As firms continue to consolidate either within industries or across industries it is appropriate to investigate those aspects of a target firm which might attract a bidder. The board of directors, a central decision-making body in the corporation, may provide insights into this process. This study investigates the relationship between board composition and size and the incidence of a firm being targeted for a merger or acquisition. Results of a logistic regression analysis of a matched set of target firms and firms not targeted for merger or acquisition reveal that target firms have higher proportions of independent outside directors and more total numbers of directors. Moreover, we find that target firms have greater exposure to institutional investors.

Cause-related marketing for successful cross-border post-acquisition performance

2019 ◽  
Vol 37 (4) ◽  
pp. 695-712 ◽  
Author(s):  
Michela Matarazzo ◽  
Riccardo Resciniti ◽  
Biagio Simonetti
Keyword(s):  
Negative Influence ◽  
Positive Influence ◽  
Target Firm ◽  
Content Type ◽  
Repurchase Intentions ◽  
Cross Border ◽  
Cause Related Marketing ◽  
The Impact ◽  
Moderating Role

Purpose Building on the scant literature on cross-border acquisitions (CBAs) in the consumer perspective, the purpose of this paper is to investigate the impact of the acquirer’s cause-related marketing (CRM) on consumers’ repurchase intentions of the products of the post-acquisition target. In addition, the study aims at analyzing the moderating role of acquirer’s CRM on the relationship between corporate ability (CA) and country image (CI) on consumers’ repurchase intentions of the products of the post-acquisition target. Design/methodology/approach Drawing on a sample of Italian consumers (n=351), the authors examined the roles played by the acquirer’s CRM on consumer behaviour by considering an Italian target firm with a high reputation and comparing eight foreign acquiring firms with different combinations of CRM (poor/good), CA (poor/good) and CI (high/low). Findings The authors found that CRM, CA as well as CI have a significant impact on Italian consumers’ intention to repurchase the products of the post-acquisition target. Furthermore, it is shown that good CRM reduces the negative influence of a poor CA and a low CI on post-acquisition repurchase intentions and strengthen the positive influence, thus confirming the moderating role of CRM. Originality/value The research investigates, in the context of CBAs, the impact of the acquirer’s CRM on the host country consumers’ repurchase intentions after the CBA, which has not previously been examined. It can help managers to understand the conditions under which CBAs will be favourably evaluated.

scholarly journals Acquisitions of Financially Constrained Targets

2019 ◽  
pp. 1-10
Author(s):  
Maslinawati Mohamad ◽  
Surendranath Rakesh Jory ◽  
Nnamdi Madichie
Keyword(s):  
United States ◽  
Mergers And Acquisitions ◽  
Stock Returns ◽  
Abnormal Returns ◽  
The United States ◽  
Target Firm ◽  
Wealth Transfer ◽  
Stock Market Reaction ◽  
Cumulative Abnormal Returns ◽  
Acquisition Announcements

We examine the extent to which bidders’ stock returns at acquisition announcements reflect the financing needs of the target firm. Using a sample of the United States mergers and acquisitions of a period starts in 1985 and ends in 2012, we find that bidders of financially constrained targets pay lower acquisition premiums and earn higher announcement period cumulative abnormal returns than bidders of unconstrained targets. The lower premium and positive stock market reaction are both sources of value for bidders’ shareholders. Our results contrast the findings of the literature that document an insignificant wealth transfer to bidder shareholders.

scholarly journals Agency conflicts and the wealth effects of proxy contests

2014 ◽  
Vol 12 (1) ◽  
pp. 8-30
Author(s):  
Gurmeet Singh Bhabra ◽  
Chris Wood
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Agency Costs ◽  
Shareholder Wealth ◽  
Good News ◽  
Wealth Effects ◽  
Agency Conflicts ◽  
Target Firm ◽  
Proxy Contests

We examine the shareholder wealth impact of proxy contests and find that over the three years preceding the contest, target stock prices significantly underperform their industry peers. In addition, consistent with the monitoring role of proxy contests, the announcement and full contest periods result in a positive stock price reaction suggesting that the market views the initiation of a proxy contest as good news. Interesting differences emerge between firms in which dissidents win seats and those where they do not win seats. While target firm stock prices appreciate for all firms at the announcement, such wealth gains are permanent only for the subsample of targets which not only are afflicted with elevated levels of agency problems but also make significant reduction in discretionary expenditures. When dissidents do not win seats, no attempt to reduce agency costs is apparent, and as a result, these firms experience a sustained wealth loss over the years surrounding the contest. The steps taken to reduce agency costs primarily in firms in which dissidents win seats suggests that proxy contests fulfil their intended role of disciplining the board and improve firm performance.

Regulatory focus and self-evaluation maintenance: The role of strategic fit

2007 ◽  
Author(s):  
Abigail A. Scholer ◽  
E. Tory Higgins ◽  
Catherine M. O'Connor
Keyword(s):  
Regulatory Focus ◽  
Self Evaluation ◽  
Strategic Fit
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