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- Title
- Agency costs and accounting quality within an all-equity setting: the role of free cash flows and growth opportunities.
- Creator
- Cabán, David, Kohlbeck, Mark, Florida Atlantic University, College of Business, School of Accounting
- Abstract/Description
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I investigate if all-equity firms are a heterogeneous group as it relates to agency costs and accounting quality. All-equity firms are a unique group of firms that choose a “corner solution” as their capital structure. Extant research, supported by well-established theories such as trade-off theory, free cash flow theory, and Jensen’s (1986) control hypothesis, generally conclude that agency conflicts motivate such structure. Research also supports the alternative argument that poor...
Show moreI investigate if all-equity firms are a heterogeneous group as it relates to agency costs and accounting quality. All-equity firms are a unique group of firms that choose a “corner solution” as their capital structure. Extant research, supported by well-established theories such as trade-off theory, free cash flow theory, and Jensen’s (1986) control hypothesis, generally conclude that agency conflicts motivate such structure. Research also supports the alternative argument that poor accounting quality makes debt so prohibitive that such firms are driven to this capital structure. I propose that an all-equity structure is not necessarily symptomatic of agency conflicts and poor accounting quality overall. I investigate if different motivations, within an all-equity setting, reflected by free cash flows and growth opportunities, result in different levels of agency cost and accounting quality. By anchoring on theories that link implicit costs of debt to free cash flow levels and growth opportunities, I hypothesize that free cash flows and growth opportunities are strongly linked to the justification or lack thereof for the pursuit of such strategy. I hypothesize and show that firms in the extremes of the free cash flow to growth rate spectrum exhibit significantly different levels of agency cost and accounting quality within the all-equity setting. These results support my main prediction that there exists agency costs and accounting quality differences within the all-equity setting which are associated with free cash flow levels and growth opportunities and that the pessimistic conclusions for pursuing an all-equity strategy reached by prior research should not be generalized to all such firms.
Show less - Date Issued
- 2015
- PURL
- http://purl.flvc.org/fau/fd/FA00004432, http://purl.flvc.org/fau/fd/FA00004432
- Subject Headings
- Business enterprises -- Valuation, Cash management, Corporations -- Finance, Corporations -- Growth, Financial risk management, Strategic planning, Venture capital
- Format
- Document (PDF)
- Title
- Essays on international acquisitions.
- Creator
- Susnjara, Jurica., College of Business, Finance
- Abstract/Description
-
The purpose of the current manuscript was to examine acquirer and market behavior surrounding a sample of international mergers and acquisitions. The first essay examined the existence of a private company discount and its connections to liquidity. It found that unlisted targets sell for less than their public counterparts, confirming earlier findings. The examination of a connection between the discount and liquidity mostly contradicted earlier studies (Officer 2007), depending on which...
Show moreThe purpose of the current manuscript was to examine acquirer and market behavior surrounding a sample of international mergers and acquisitions. The first essay examined the existence of a private company discount and its connections to liquidity. It found that unlisted targets sell for less than their public counterparts, confirming earlier findings. The examination of a connection between the discount and liquidity mostly contradicted earlier studies (Officer 2007), depending on which subsample was selected. The second essay examined the existence of a target price runup preceding acquisitions announcements, existence of a substitution effect between runup and premium, and whether investor protection influenced the two. It confirmed the earlier findings of a significant runup preceding acquisition announcements, with the runup being more pronounced in those targets from weaker investor protection countries. Contrary to Schwert (1996), the study found a significant substitution effect between runup and premium, with the effect stronger if the acquirers are from countries with weak investor protection. The third essay examined acquirer stock price reaction to the three different components of the offer price: target's stand-alone valuation, pre-announcement runup and the offer premium. Each component was found to have an overall insignificant effect on the acquirer stock price in the overall sample. When the targets were from the countries with the weakest investor protection, the study found that the reaction to both the runup and stand-alone target valuation depend on both target and acquirer country investor protection. The study also found that when the targets were from the countries with the weakest investor protection, and only from those countries, acquirer stock price reacted negatively to any individual component of the offer price being higher., Overall, the three studies confirm that behavior of both acquirer management and their stock markets i affected by the variance in investor protection among countries.
Show less - Date Issued
- 2011
- PURL
- http://purl.flvc.org/FAU/3320104
- Subject Headings
- Consolidation and merger of corporations, Negotiation in business, Strategic planning, International business enterprises
- Format
- Document (PDF)
- Title
- Imprinting Effects of Founding Conditions, Structure, and Capabilities on Social and Financial Organizational Outcome Satisfaction.
- Creator
- Lortie, Jason, Castrogiovanni, Gary J., Florida Atlantic University, College of Business, Department of Management
- Abstract/Description
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My work investigates the effects of founding conditions for organizational founders on the eventual satisfaction founders have with the financial and social outcomes of their organization. First, I introduce two new constructs, social salience and economic salience, which represent the intended social or economic goals of the founder for their organization when they found the new organization. I then utilize organizational imprinting theory to argue that the social and economic salience,...
Show moreMy work investigates the effects of founding conditions for organizational founders on the eventual satisfaction founders have with the financial and social outcomes of their organization. First, I introduce two new constructs, social salience and economic salience, which represent the intended social or economic goals of the founder for their organization when they found the new organization. I then utilize organizational imprinting theory to argue that the social and economic salience, along with founders’ previous work experience, influence the structure of the new organization via the legal form. I then argue that the legal form influences the specific capabilities that the organization will acquire or create early in the organization’s life. Finally, I argue that the capabilities established at founding will influence the eventual satisfaction founders currently have with their organizations’ social and financial outcomes as the capabilities endure over time. Based on a sample of 150 organizational founders that are still actively managing their organizations, my results support the idea that founding conditions for individual founders influence the capabilities that their organizations create or acquire. Further, founders’ current level of satisfaction with the financial and social performance of their organizations is significantly related to these capabilities. These results largely support the process based model of imprinting effects on organizational outcomes, and suggest that founders play a critical role in setting the original imprint of an organization that will endure via organizational inertia, perhaps long after the imprint’s originally designed purpose.
Show less - Date Issued
- 2016
- PURL
- http://purl.flvc.org/fau/fd/FA00004655, http://purl.flvc.org/fau/fd/FA00004655
- Subject Headings
- Corporate governance, Organizational change -- Management, Performance -- Management, Performance -- Measurement, Rational expectations (Economic theory), Social entrepreneurship, Strategic planning
- Format
- Document (PDF)
- Title
- Maturity of IT risk management practices and reporting structure: an it manager perspective.
- Creator
- Vincent, Surani, Higgs, Julia, Florida Atlantic University, College of Business, School of Accounting
- Abstract/Description
-
In December 2009, the Securities Exchange Commission (SEC) approved enhanced proxy disclosure rules requiring companies to disclose the board’s leadership structure and the board’s role in risk oversight. Apart from general business risks, boards are increasingly interested in Information Technology (IT) risks as it affects all aspects of the organization (PricewaterhouseCoopers [PwC], 2013). Since the effectiveness of IT risk management depends on senior managers’ actions, this dissertation...
Show moreIn December 2009, the Securities Exchange Commission (SEC) approved enhanced proxy disclosure rules requiring companies to disclose the board’s leadership structure and the board’s role in risk oversight. Apart from general business risks, boards are increasingly interested in Information Technology (IT) risks as it affects all aspects of the organization (PricewaterhouseCoopers [PwC], 2013). Since the effectiveness of IT risk management depends on senior managers’ actions, this dissertation attempts to answer the question of whether the maturity of IT risk management practices (the extent to which management performs particular activities to identify, assess, monitor and respond to IT-related risks) in organizations depends on the Chief Information Office (CIO) reporting structure and the board’s leadership structure.
Show less - Date Issued
- 2014
- PURL
- http://purl.flvc.org/fau/fd/FA00004336, http://purl.flvc.org/fau/fd/FA00004336
- Subject Headings
- Corporate governance, Decision making, Information technology -- Management, Information technology -- Social aspects, Management information systems, Risk management, Strategic planning
- Format
- Document (PDF)
- Title
- Three essays on competitive acquisition bids.
- Creator
- Glambosky, Mina C., College of Business, Department of Finance
- Abstract/Description
-
Many factors contribute to the outcome of an acquisition; these factors arise from both the objective of the target and acquirer. This dissertation focuses on how the bidding strategy, acquirer and target characteristics impact the transaction. The first essay examines how the timing and size of the acquirer's bid for a U.S. target firm impacts their return. I find that successful first and low bid acquirers experience significantly larger returns than successful secondary and non-low bid...
Show moreMany factors contribute to the outcome of an acquisition; these factors arise from both the objective of the target and acquirer. This dissertation focuses on how the bidding strategy, acquirer and target characteristics impact the transaction. The first essay examines how the timing and size of the acquirer's bid for a U.S. target firm impacts their return. I find that successful first and low bid acquirers experience significantly larger returns than successful secondary and non-low bid acquirers. The cross-sectional analysis determines that higher levels of target institutional ownership and acquisitions completed prior to the passage of Sarbanes-Oxley result in reduced returns to the acquirer. In addition, the likelihood of a successful first bid acquirer increases with a revised bid and when the acquirer is both the first and low bid acquirer simultaneously. The likelihood of a successful first bid acquirer decreases as the number of bidders increases and as the bidding process lengthens. I also find that the likelihood of a successful low bid acquirer increases the longer the bidding process. The second essay examines how the timing and size of the acquirer's bid for an international target impacts their return. I find that successful first and low bid acquirers experience insignificant abnormal returns following the acquisition announcement. In addition, the likelihood of a successful first bid acquirer increases when the acquirer and target have similar cultures, with higher levels of target government corruption and when the acquirer is both the first and low bid acquirer simultaneously. The likelihood of a successful low bid acquirer decreases with higher levels of target government corruption. I also examine what factors affect the target premium and find that larger transactions and successful first bid acquirers increase the target premium., Conversely, similar cultures and higher levels of government corruption, rule of law, bureaucracy, expropriation and ethnic tension decrease the premium to the target. Lastly, successful first and low bid acquirers experience statistically larger long run abnormal returns than successful secondary and non-low bid acquirers. The third essay examines how a stake accumulation by a conflicted blockholder influences the target's return. I find that targets experience positive cumulative abnormal returns upon the announcement of the Family, ESOP, Management and High Profile Investor stake accumulation. The cross-sectional analysis determines that privately negotiated transactions reduce the return to the target and that higher levels of stake accumulation are positively related to the target's return. Finally, targets experience negative abnormal long run returns following all four types of stake accumulation.
Show less - Date Issued
- 2009
- PURL
- http://purl.flvc.org/FAU/228768
- Subject Headings
- Consolidation and merger of corporations, Industrial management, Negotiation in business, Strategic planning
- Format
- Document (PDF)