Meger Means of Payment and Analysts' Bias between Merger Announcement Date and Merger Effective (Withdrawn) Date

ABSTRACT This study examines whether acquirer NOL-related tax benefits generated in an acquisition are shared with the target. For a sample of 1,959 acquisitions, we find that acquisitions of profitable targets by acquirers with NOLs are associated with higher acquisition premiums than acquisitions by non-NOL acquirers. This result indicates that potential post-acquisition tax benefits from use of acquirer NOLs are shared with the target in the form of higher transaction prices. We also find that the acquirer's merger announcement stock price response is positively associated with these tax benefits, which is consistent with the conclusion that acquirers retain part of these potential tax benefits.

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Financial institutions mergers: a strategy choice of wealth maximisation and economic value

Journal of Financial Economic Policy ◽

10.1108/jfep-06-2019-0113 ◽

2020 ◽

Vol 12 (4) ◽

pp. 495-529

Author(s):

Mohamad Hassan ◽

Evangelos Giouvris

Keyword(s):

Credit Risk ◽

Event Study ◽

Financial Institutions ◽

Value Creation ◽

Economic Value ◽

Abnormal Returns ◽

Study Analysis ◽

Event Window ◽

Content Type ◽

Merger Announcement

Purpose This study Investigates Shareholders' value adjustment in response to financial institutions (FIs) merger announcements in the immediate event window and in the extended event window. This study also investigates accounting measures performance, comparison of post-merger to pre-merger, including several cash flow measures and not just profitability measures, as the empirical literature review suggests. Finally, the authors examine FIs mergers orientations of diversification and focus create more value for shareholders (in the immediate announcement window and several months afterward) and/or generates better cash flows, profitability and less credit risk. Design/methodology/approach This study examines FIs merger effect on bidders’ shareholder’s value and on their observed performance. This examination deploys three techniques simultaneously: a) an event study analysis, to estimate and calculate abnormal returns (ARs) and cumulative abnormal returns (CARs) in the narrow windows of the merger announcement, b) buy and hold event study analysis, to estimate ARs in the wider window of the event, +50 to +230 days after the merger announcement and c) an observed performance analysis, of financial and capital efficiency measures before and after the merger announcement; return on equity, liquidity, cost to income ratio, capital to total assets ratio, net loans to total loans, credit risk, loans to deposits ratio, other expenses and total assets, economic value addition, weighted average cost of capital and return on invested capital. Deal criteria of value, mega-deals, strategic orientation (as in Ansoff (1980) growth strategies), acquiring bank size and payment method are set as individually as control variables. Findings Results show that FIs mergers destroy share value for the bidding firms pursuing a market penetration strategy. Market development and product development strategies enable shareholders’ value creation in short and long horizons. Diversification strategies do not influence bidding shareholders’ value. Local bank to bank mergers create shareholders’ value and enhance liquidity and economic value in the short run. Bank to bank cross border mergers create value for bidders’ in the long term but are associated with high costs and higher risks. Originality/value A significant advancement over the current literature is in assessing mergers, not only for bank bidders but also for the three pillars FIs of the financial sector; banks, real-estate companies and investment companies mergers. It is an improvement over current finance literature because it deploys two different strategies in the analysis. At a univariate level, shareholder value creation and market reaction to merger announcements are examined over short (−5 or +5 days) and long (+230 days) windows of the event. Followed by regressing, the resultant CARs and BHARs over financial performance variables at the multivariate level.

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The valuation effects of hotel mergers

Tourism Economics ◽

10.1177/13548166211050475 ◽

2021 ◽

pp. 135481662110504

Author(s):

Seongsu David Kim

Keyword(s):

Panel Data Analysis ◽

Hotel Industry ◽

Abnormal Returns ◽

Lodging Industry ◽

Causal Inferences ◽

Valuation Effects ◽

Cumulative Abnormal Returns ◽

Announcement Date ◽

Total Debt ◽

Jel Classifications

This study aims to evaluate the merger effect of hotel mergers between 1981 and 2019 and assess which theoretical framework mergers in the lodging industry would conform. Previously, no work has been done about the nature of hotel mergers using the combined return, while this lack of thoroughness in assessing the motivation of those mergers has triggered different interpretations. The design of this study follows the traditional framework of an event study by assessing various types of cumulative abnormal returns around the announcement date. The key finding of this study suggests that the nature of hotel mergers strongly supports the synergy hypothesis. In order to explore the causal inferences of this result by bidder and target, an additional analysis was conducted by regressing the cumulative abnormal returns on accounting measures as well as merger- and hotel industry–specific variables. This panel data analysis showed that in a merger where both the bidder and target are affected, the amount of total debt, being engaged in the casino business, and whether the merger was involving a stock swap sent out positive signals to the market, whereby longer duration and higher deal value lifted the undervalued target. JEL Classifications: G34 (Mergers; Restructuring; Corporate Governance)

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Stock price movement around the merger announcements: insider trading or market anticipation?

Managerial Finance ◽

10.1108/mf-09-2013-0256 ◽

2014 ◽

Vol 40 (8) ◽

pp. 821-843 ◽

Cited By ~ 6

Author(s):

Pawan Jain ◽

Mark A. Sunderman

Keyword(s):

Insider Trading ◽

Stock Price ◽

Policy Implications ◽

Securities Market ◽

Price Movement ◽

Content Type ◽

Different Types ◽

Time Periods ◽

Merger Announcement ◽

Merger Announcements

Purpose – The purpose of this paper is to examine the stock price movements for existence of informed trading prior to a merger announcement for the companies listed on the emerging markets of India for the period from 1996 to 2010. Design/methodology/approach – This study applies several event study methodologies and regression analyses to analyze the stock price movement surrounding a merger announcement. The paper divides mergers in two different types: industry merger cases and non-industry merger cases and in two different time periods: recession and boom. Findings – The results show that the information held only by insiders’ works its way into prices. The paper finds strong evidence of insider trading in the case of industry mergers and mergers during recessions. Practical implications – The results from this study have immediate policy implications for India and other developing markets as the paper provides the type of mergers and time periods when merger announcements are more susceptible to insider trading. Originality/value – The paper extends the literature on mergers and insider trading by analyzing firms trading on a developing capital market, which, unlike the developed markets, is characterized by inadequate disclosure and a weaker enforcement of securities regulations. The results support this notion and recommend Indian securities market regulators to tighten the lax regulations. In addition, the author document the divergence in price reaction to the merger announcements for different types of mergers: industry mergers and non-industry mergers, as well as for mergers during different market conditions: recession vs booming capital markets.

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Reaksi Pasar Atas Pengumuman Corporate Governance Perception Index

E-Jurnal Akuntansi ◽

10.24843/eja.2019.v27.i03.p29 ◽

2019 ◽

pp. 2432 ◽

Cited By ~ 1

Author(s):

I Gede Krisna Dharma Putra ◽

I Gusti Ayu Eka Damayanthi

Keyword(s):

Corporate Governance ◽

Capital Market ◽

Abnormal Return ◽

Sampling Method ◽

Market Reaction ◽

Stock Exchange ◽

Stock Trading ◽

Announcement Date ◽

Analysis Technique ◽

The One

CGPI is the result of research from the Indonesian Institute for Corporate Governance (IICG) in collaboration with SWA magazine. This study aims to determine the reaction of the capital market on the CGPI announcement. The research was conducted at the company surveyed by CGPI for the period 2013-2016 by accessing the Indonesia Stock Exchange, IICG, Yahoo finance and SWA magazines. The population in this study were the companies surveyed by the Corporate Governance Perception Index (CGPI) for the period 2013-2016. The number of samples taken was 61 using the purposive sampling method. The data analysis technique used is the one sample t-test. Based on the results of the analysis, it was found that during the seven days of stock trading around the announcement of the Corporate Governance Perception Index (CGPI) without involving the comfounding effect (other announcements) there was no market reaction around the CGPI announcement date. Keywords: Corporate Governance Perception Index (CGPI), abnormal return, market reaction

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