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Title: Acquisition of Private Firms.
Creator: Faifman, Leon, Ellis, Kimberly, Golden, Peggy, Florida Atlantic University, College of Business, Department of Management
Abstract/Description: Mergers and acquisitions (M&As) of private target firms is a common phenomenon and being acquired is the desired outcome for some private firms, as it is the path to wealth creation for these firm’s owners and investors. However, this M&A type has received limited attention in the literature, especially from the perspective of the target firm. Furthermore, neither a theoretical model to explain the phenomenon where the goal of the target firm is to be acquired in M&A, nor an indicator to...
Show moreMergers and acquisitions (M&As) of private target firms is a common phenomenon and being acquired is the desired outcome for some private firms, as it is the path to wealth creation for these firm’s owners and investors. However, this M&A type has received limited attention in the literature, especially from the perspective of the target firm. Furthermore, neither a theoretical model to explain the phenomenon where the goal of the target firm is to be acquired in M&A, nor an indicator to gauge wealth creation for such firms were identified in the review of the literature. This paper established that, because being acquired in a M&A may be the goal, the wealth generated from the M&A is the outcome or performance indicator for such firms. The outcomes of M&As depend, among other factors, on the acquiring firm’s perception of the target firm’s value. Thus, this paper coined the term ‘private firm’s attractiveness as an acquisition target’, and built on the resource based view of the firm and signaling theory to identify factors that influence a private firm’s attractiveness to acquirers. Furthermore, private firm’s attractiveness as an acquisition target was used as the bridge between the acquiring firm perspective and target firm perspective in a M&A. The resource-based view of the firm and the signaling theory were used jointly in building the theoretical framework for hypotheses development. Hypotheses were tested using a sample of 222 acquisitions of US private target firms by US public acquiring firms. Hierarchical regression with inverse mills ratio, as well as two-step Heckman model were used to address the potential selection hazard. Results provided strong support for most hypotheses, and showed that investor involvement, target firm’s industry innovativeness, and target firm’s emphasis on growth in human capital were positively related to the private firm’s attractiveness as an acquisition target. Furthermore, the effects of emphasis on growth in human capital were stronger when the target firm’s growth in revenue was lower and when the target firm operated in a more innovative industry. The effects of emphasis on growth in revenue were stronger when the target firm operated in a less innovative industry.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013168
Subject Headings: Mergers and Acquisitions, Consolidation and merger of corporations, Private companies
Format: Document (PDF)

Title: Essays in corporate restructuring.
Creator: Murdock, Maryna., College of Business, Department of Finance
Abstract/Description: This essay focuses on firms that have publicly issued announcements that they were seeking a buyer. Managers of the firms in this unique sample display an idiosyncratic behavior by expressing a willingness to relinquish private benefits of control. The essay investigates the possible factors that may lead managers of these firms to issue such announcements, the effects of issuing "seeking buyer" announcements on shareholders' wealth, and the probability that such firms are later acquired....
Show moreThis essay focuses on firms that have publicly issued announcements that they were seeking a buyer. Managers of the firms in this unique sample display an idiosyncratic behavior by expressing a willingness to relinquish private benefits of control. The essay investigates the possible factors that may lead managers of these firms to issue such announcements, the effects of issuing "seeking buyer" announcements on shareholders' wealth, and the probability that such firms are later acquired. Results indicate that firms in poor financial condition, as well as larger and more homogeneous firms are more likely to issue a "seeking buyer" announcement. The interpretation of such results is that firms resort to issuing the announcement when a sale seems to be the means for survival, and when the sale is less likely without such an aggressive sale strategy. The announcements have a positive impact on shareholders' wealth, though they do not increase the probability of an acquisition. Essay 2: Shifts in risk as the result of corporate divestitures. The second essay investigates the effect of corporate divestitures on risk, while previous research focused exclusively on changes in shareholders' wealth. Specifically, this study explores changes in systematic, total and idiosyncratic risk as the result of spin-offs, carve-outs and asset sales. Additionally, I study factors that may explain the variation in risk changes as the result of the three types of divestitures. I document an increase in total and idiosyncratic risk for all types of divestitures, an increase in one of the measures of systematic risk for spin-offs and carve-outs and a reduction in systematic risk for asset sales. Change in risk is negatively correlated with the degree of focusing as the result of divestitures, and positively correlated with change in financial leverage.
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Date Issued: 2010
PURL: http://purl.flvc.org/FAU/2978988
Subject Headings: Consolidation and merger of corporations, Corporate reorganizations, Strategic alliances (Business)
Format: Document (PDF)

Title: Corporate control: The case of partial acquisitions.
Creator: Spencer, Carolyn A., Florida Atlantic University, Madura, Jeff
Abstract/Description: The form of the partial acquisition provides a unique opportunity to analyze the influence the partial acquirer has on the target firm which is not available in full acquisitions. This dissertation investigates how the subsequent decisions of both the partial acquirer and the partially acquired target affect their own stock valuations and the stock valuations of the other firm. Only partial acquisitions of less than 50% were considered so that the effect of corporate control without overt...
Show moreThe form of the partial acquisition provides a unique opportunity to analyze the influence the partial acquirer has on the target firm which is not available in full acquisitions. This dissertation investigates how the subsequent decisions of both the partial acquirer and the partially acquired target affect their own stock valuations and the stock valuations of the other firm. Only partial acquisitions of less than 50% were considered so that the effect of corporate control without overt control could be measured. An event-study methodology is used to measure the stock price reactions of both firms to the announcement of several type of events: (1) acquisition/divestiture strategies, (2) dividend changes and (3) capital structure changes. The observed stock price reactions are then examined cross-sectionally to test whether firm-specific factors of explicit and implicit controls are influential in explaining the stock price reactions. A second goal of this dissertation was to measure the long term valuations of both firms and the combined entity to determine if the form of the partial acquisition is superior to that of a full acquisition. Again, various firm specific factors of explicit and implicit controls are tested cross-sectionally to determine their explanatory power on the long term valuations of both firms. The results of the event studies support the hypotheses that the actions of the partial acquirer do have an effect on the stock valuations of the partially acquired target (and vice versa) without the acquirer possessing a majority ownership position. In addition, several measures of explicit and implicit controls were found to be significant determinants of the short term stock valuations. The long term valuation studies implied that the form of the partial acquisition may not be superior to that of a full acquisition. However, it was determined that certain firm-specific factors (relatedness of the acquirer and target) have a significant effect on the long-term valuations for both firms.
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Date Issued: 1996
PURL: http://purl.flvc.org/fcla/dt/12472
Subject Headings: Consolidation and merger of corporations, Corporations--Finance, Investments
Format: Document (PDF)

Title: Growth options in mergers.
Creator: Davis, Sean M., College of Business, Department of Finance
Abstract/Description: This dissertation is a growth options analysis of high tech mergers. I analyze the impact growth options have on the likelihood of a high tech firm being acquired, the premiums paid for these acquisitions, and the synergies that result from these mergers. I examine how proxies for growth options interact with those for the resources needed to fund growth. A significant part of my analysis involves developing and examining a new growth options proxy, Gamma, the return on investment a firm...
Show moreThis dissertation is a growth options analysis of high tech mergers. I analyze the impact growth options have on the likelihood of a high tech firm being acquired, the premiums paid for these acquisitions, and the synergies that result from these mergers. I examine how proxies for growth options interact with those for the resources needed to fund growth. A significant part of my analysis involves developing and examining a new growth options proxy, Gamma, the return on investment a firm realizes in growth options value from its R&D expenditures. I find that firms that are better than their peers in converting R&D into growth options value, i.e. they have high Gamma, are more likely to be targeted for acquisition than low-Gamma firms. The premiums paid are impacted most by the characteristics of the deal, primarily when deals are competitive, and GDP growth. The acquirer's Gamma, however, is very significant in predicting premiums. Acquiring firms with high Gamma pay significantly lower premiums. The synergies that result from a merger are measured in short and long run returns, and most mergers result in value destruction to the combined firm. In the fewer than 20% of the mergers that resulted in positive long run abnormal returns, the premium paid and whether the deal was competitive significantly reduced the returns. However the two characteristics that significantly increased returns were the acquirer's Gamma and if the acquirer and target had complementary characteristics for growth options levels and free cash flow.
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Date Issued: 2011
PURL: http://purl.flvc.org/FAU/3357425
Subject Headings: Consolidation and merger of corporations, Corporations, Finance, Conglomerate corporations
Format: Document (PDF)

Title: The Role of Interorganizational Trust in the Merger and Acquisition Process.
Creator: Parola, Heather R., Ellis, Kimberly M., Florida Atlantic University, College of Business, Department of Management
Abstract/Description: Although recognized as an important stage of the merger and acquisition (M&A) process, little is understood about the processes that unfold during deal negotiations. In line with recent qualitative research highlighting the role of interorganizational trust, I examine the role of acquirer trust during M&A negotiations. Specifically, through two essays, I consider the effects of acquirer trust on two outcome variables: the acquisition premium and target executive retention. In Essay One, I...
Show moreAlthough recognized as an important stage of the merger and acquisition (M&A) process, little is understood about the processes that unfold during deal negotiations. In line with recent qualitative research highlighting the role of interorganizational trust, I examine the role of acquirer trust during M&A negotiations. Specifically, through two essays, I consider the effects of acquirer trust on two outcome variables: the acquisition premium and target executive retention. In Essay One, I integrate the social embeddedness theory and agency theory and find that acquirer trust leads to higher premiums. In Essay Two, I integrate the social embeddedness perspective with justice theory and find that the positive relationship between acquirer trust and target executive retention is mediated by justice. Boundary conditions are also considered in each essay. These two essay provide contributions to the nascent literature on M&A negotiations and the complex role of trust in M&A negotiations.
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Date Issued: 2015
PURL: http://purl.flvc.org/fau/fd/FA00004532, http://purl.flvc.org/fau/fd/FA00004532
Subject Headings: Consolidation and merger of corporations -- Psychological aspects, Consolidation and merger of corporations -- Social aspects, Corporate culture, Group decision making, Organizational behavior -- Moral and ethical aspects
Format: Document (PDF)

Title: Investment bank role in corporate restructuring.
Creator: Cao, Kien., College of Business, Department of Finance
Abstract/Description: In essay 1 (Investment bank role in acquisition of private targets), using a sample of private targets from January 1992 to December 2010, I find that special information asymmetry when bidders prusue private targets alters the factors used by bidders and targets to decide whether to hire an investment bank.... It appears that the investment bank has a significant impact on the outcome of the acquisition of a private target. In essay 2 (Investment bank role in asset sell-off transactions), I...
Show moreIn essay 1 (Investment bank role in acquisition of private targets), using a sample of private targets from January 1992 to December 2010, I find that special information asymmetry when bidders prusue private targets alters the factors used by bidders and targets to decide whether to hire an investment bank.... It appears that the investment bank has a significant impact on the outcome of the acquisition of a private target. In essay 2 (Investment bank role in asset sell-off transactions), I also find that special information asymmetry when a buyer pursues divested assets alters the factors used by the buyer and seller to decide whether to hire an investment bank. ...I find that when the seller empoloys an investment bank, the increase in unsystematic and total risk of the buyer is greater than in cases when the seller does not use an investment bank.
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Date Issued: 2012
PURL: http://purl.flvc.org/FAU/3359289
Subject Headings: Banks and banking, Consolidation and merger of corporations, Corporate reorganizations, Reengineering (Management)
Format: Document (PDF)

Title: Cross-border M&A deal incompletion: institutional processes and outcomes.
Creator: Yapici, Nilufer, Hudson, Bryant A., Florida Atlantic University, College of Business, Department of Management
Abstract/Description: My objective in this dissertation was to understand the processes leading to incompletion of the high profile cross-border deals. A conceptual framework was developed which suggests that announcement of a cross-border merger and acquisition (M&A) deal starts a string of institutional processes that leads to incompletion of the bid. I proposed that less powerful host country actors threatened by the MNC’s bid proposal politicize the transaction turning the deal into a transgression. These...
Show moreMy objective in this dissertation was to understand the processes leading to incompletion of the high profile cross-border deals. A conceptual framework was developed which suggests that announcement of a cross-border merger and acquisition (M&A) deal starts a string of institutional processes that leads to incompletion of the bid. I proposed that less powerful host country actors threatened by the MNC’s bid proposal politicize the transaction turning the deal into a transgression. These actors publicize this transgression, initiating a scandal, to gather support of multiple audiences in their attempts to thwart the threat that the MNC poses. Thanks to their efforts in appealing to audiences and publicization of the deal as a transgression, these actors mobilize audiences who reveal hostile reaction against the MNC and the proposed bid. Such mobilization and hostile reaction, in turn, lead to proposed bid’s incompletion. Qualitative analysis results based on a sample of seven high profile cross-border transactions provided support for the conceptualized processes, namely politicization, scandal, mobilization and hostile reaction, while indicating a different order of process progression compared to the linear one conceptualized. I found that in all cases the process of scandal subsumed the other processes that kept scandal alive. In turn, scandal fed these processes giving more leverage to the mobilization efforts and/or increasing the hostility of the actors opposing the deal. The findings revealed that these processes happened simultaneously and that in cases where mobilization did not emerge, hostile reaction substituted for the lack of mobilization. Additionally, analysis showed that not only less powerful actors but also powerful actors, elites, sought to initiate a scandal when the host country political, legal or bureaucratic processes did not work for them in thwarting the deal. This dissertation by examining social construction, power and politics within the host country institutional environment in the context of high profile cross-border deals, presented a framework that explained how and why the hostility leading to deal incompletion emerges in the host country. In so doing, this dissertation strengthens institutional theory, theory of scandal, social movements theory and elite theory as powerful perspectives in international strategic -management.
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Date Issued: 2014
PURL: http://purl.flvc.org/fau/fd/FA00004240
Subject Headings: Consolidation and merger of corporations, Corporate governance, International business enterprises -- Management
Format: Document (PDF)

Title: Risk dynamics, growth options, and financial leverage: evidence from mergers and acquisitions.
Creator: Coy, Jeffrey M., College of Business, Department of Finance
Abstract/Description: In essay I, I empirically examine theoretical inferences of real options models regarding the effects of business risk on the pricing of firms engaged in corporate control transactions. This study shows that the risk differential between the merging firms has a significant effect on the risk dynamic of bidding firms around control transactions and that the at-announcement risk dynamic is negatively related to that in the preannouncement period. In addition, the relative size of the target,...
Show moreIn essay I, I empirically examine theoretical inferences of real options models regarding the effects of business risk on the pricing of firms engaged in corporate control transactions. This study shows that the risk differential between the merging firms has a significant effect on the risk dynamic of bidding firms around control transactions and that the at-announcement risk dynamic is negatively related to that in the preannouncement period. In addition, the relative size of the target, the volatility of bidder cash flows, and the relative growth rate of the bidder have significant explanatory power in the cross-section of announcement returns to bidding firm shareholders as does the change in the cost of capital resulting from the transaction. Essay II provides an empirical analysis of a second set of real options models that theoretically examine the dynamics of financial risk around control transactions as well as the link between financial leverage and the probability of acquisition. In addition, I present a comparison of the financial risk dynamics of firms that choose an external growth strategy, through acquisition, and those that pursue an internal growth strategy through capital expenditures that are unrelated to acquisition.
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Date Issued: 2013
PURL: http://purl.flvc.org/fcla/dt/3362323
Subject Headings: Consolidation and merger of corporations, Financial services industry, Mathematical models, Corporations, Finance, Financial risk management
Format: Document (PDF)

Title: Two essays on newly public firms.
Creator: Wiggenhorn, Joan, Florida Atlantic University, Madura, Jeff
Abstract/Description: This dissertation examines the stock price behavior of newly public firms following two separate events, acquisition announcements and a large single day price change. For the first essay on overreaction, the changes in both liquidity and information are considered in studying the stock price reaction to a trigger of +/-15%. Over 2,600 events are evaluated for these newly public firms from 1992--2001 with events classified as occurring during either the quiet, lockup or post lockup period....
Show moreThis dissertation examines the stock price behavior of newly public firms following two separate events, acquisition announcements and a large single day price change. For the first essay on overreaction, the changes in both liquidity and information are considered in studying the stock price reaction to a trigger of +/-15%. Over 2,600 events are evaluated for these newly public firms from 1992--2001 with events classified as occurring during either the quiet, lockup or post lockup period. For positive trigger events during the quiet period, a large one-day price change results in a significant underreaction. Positive triggers during the lockup period result in no significant abnormal returns, while a statistically significant overreaction occurs during the post lockup period. For negative triggers, while there are no significant abnormal returns for the reactions in any period, there is nevertheless a statistically significant difference between the reactions during the quiet and the post lockup periods. In addition, the degree of market reaction is found to be significantly different for events with information versus events without information. The second essay examines the stock price reaction when newly public firms make acquisition announcements. The belief is that these firms may experience a more positive reaction due to the firms' smaller size, need for immediate expansion, and increased corporate governance. On the other hand, these firms may lack the expertise to successfully integrate the acquisition targets. The results show that these newly public firms experience significant announcement returns of 2.63%. In general, higher announcement returns are found the smaller the acquirer, the smaller the relative size of the acquisition, and if the target is privately held. While the presence of venture capitalists and top tier underwriters result in lower announcement returns, returns are higher if the acquisition advisor is the same as the original underwriter. The buy and hold abnormal returns calculated using a matched sample are not significant. However, acquisitions with economies of scale for the motive have returns of 15% following one year, while those for economies of scope have -15% and the difference is significant.
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Date Issued: 2003
PURL: http://purl.flvc.org/fau/fd/FADT12063
Subject Headings: Stocks--Prices, Going Public (Securities), Consolidation and Merger of Corporations, Corporations--Finance
Format: Document (PDF)

Title: Essays on Corporate Restructuring.
Creator: Harris, Oneil M., Madura, Jeff, Florida Atlantic University
Abstract/Description: Corporate restructuring may be defined as the reorganization of a company with the aim of improving efficiency. This dissertation examines two corporate restructuring activities, namely (i) spinoffs and (ii) mergers and acquisitions. The first essay examines whether poison pill adoptions by impending spinoff subsidiaries is consistent with goal of shareholder wealth maximization. The main implication of my findings is that poison pills do not deter takeovers; not even in environments where...
Show moreCorporate restructuring may be defined as the reorganization of a company with the aim of improving efficiency. This dissertation examines two corporate restructuring activities, namely (i) spinoffs and (ii) mergers and acquisitions. The first essay examines whether poison pill adoptions by impending spinoff subsidiaries is consistent with goal of shareholder wealth maximization. The main implication of my findings is that poison pills do not deter takeovers; not even in environments where takeovers are more likely. Hence, poison pill adoptions may not be motivated by entrenchment. However, since managers' motives are never clear, investors react adversely to poison pill adoptions because of concerns about potential abuse of power by management. Interestingly, the evidence suggests that poison pills have a positive effect on firm value over the longterm. One possible explanation for this finding is that the potential for abuse associated with poison pills promote shareholder activism. Since activist shareholders closely monitor managers, poison pills indirectly enhance firm value. The second essay examines whether spinoff withdrawals are in response to (i) the market reaction to the initial spinoff announcement, (ii) changes in the estimated value of the unit over the spinoff interval, and (iii) changes in expected spinoff gains owing to changes in market conditions within the subsidiary's industry. It takes 7 months to complete an announced spinoff, on average, over which time industry conditions are likely to change. The main implications of my findings are that managers learn from the market and track changes in industry conditions when making spinoff decisions. It appears that managers time spinoffs for periods when the subsidiary's industry valuations are high to fetch a better price in the market for the unit. These practices are consistent with the goal of maximizing shareholders' wealth. The third essay examines whether having outside blockholders with a higher propensity to monitor managers cause variations in (i) abnormal announcement returns, (ii) proportional wealth gains, (iii) takeover premiums, and (iv) payment methods. The evidence supports the view that the types of outside blockholders that targets and bidders have, in relation to their propensity to monitor managers, affect bargaining position. Firms that have outside blockholders with higher propensities to monitor managers experience higher takeover gains because monitoring limits takeover related agency costs. Therefore, acquisitions create agency problems for minority shareholders of the target and bidder firms, when managers are not monitored.
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Date Issued: 2008
PURL: http://purl.flvc.org/fau/fd/FA00000303
Subject Headings: Poison pills (Securities)--United States, Consolidation and merger of corporations, Corporations--Sociological aspects, Corporate reorganizations--United States
Format: Document (PDF)

Title: Essays on high-tech acquisitions and divestitures.
Creator: Benou, Georgia., Florida Atlantic University, Madura, Jeff
Abstract/Description: Since the early 1990s there has been a substantial increase both in mergers and acquisitions (M&A) as well as in divestitures of high-tech companies. This dissertation examines the takeover and divestiture activity in high-tech markets in an effort to extend our current knowledge regarding high-tech companies. In that context, various firm characteristics and their relation to firm performance are investigated. Furthermore, an attempt is made to examine the role of investment banks and their...
Show moreSince the early 1990s there has been a substantial increase both in mergers and acquisitions (M&A) as well as in divestitures of high-tech companies. This dissertation examines the takeover and divestiture activity in high-tech markets in an effort to extend our current knowledge regarding high-tech companies. In that context, various firm characteristics and their relation to firm performance are investigated. Furthermore, an attempt is made to examine the role of investment banks and their impact---if any---on shareholder wealth. This study finds that for domestic high-tech acquisitions, the higher the level of the target's R&D expenditures, the lower the bidder's announcement period wealth effects. Furthermore, the more MEDIA attention the tech target receives prior to the acquisition the more favorably investors react to news about the acquisition. This finding is common both for domestic and international tech acquisitions. Findings on the role of investment bank advisors vary across the three studies. Essay 1 shows that high-tech acquisitions advised by top-tier investment banks perform worse upon announcement than acquisitions advised by lower-tier investment banks. In Essay 2 the tier of the investment bank advisor makes a difference only during the difficult and uncertain years of the tech downturn time period. Finally, in Essay 3 it is found that sellers benefit from the presence of an investment bank advising the buyer, suggesting that whenever the buyer uses an investment bank, the assets are divested at a high price. However, it is only during the years following the end of the tech-bubble period that buying-firm shareholders reacted less favorably to acquisitions of high-tech divested assets certified by an investment bank.
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Date Issued: 2004
PURL: http://purl.flvc.org/fau/fd/FADT12101
Subject Headings: Corporate divestiture--United States, Consolidation and merger of corporations--Management, High technology industries--Management, Corporations--Finance
Format: Document (PDF)

Title: Application of reference point theory to merger activity and characteristics.
Creator: Chira, Inga., College of Business, Department of Finance
Abstract/Description: In Essay I, I analyze the impact of the target and bidder reference points on the probability of acquisition under general economic conditions as well as in strong/weak economic periods. I find that the target and the bidder reference points have a significant impact on the probability of a firm becoming a bidder or a target. While the target reference point also has a significant impact on the successful completion of the merger, the bidder reference point does not. In addition, I find that...
Show moreIn Essay I, I analyze the impact of the target and bidder reference points on the probability of acquisition under general economic conditions as well as in strong/weak economic periods. I find that the target and the bidder reference points have a significant impact on the probability of a firm becoming a bidder or a target. While the target reference point also has a significant impact on the successful completion of the merger, the bidder reference point does not. In addition, I find that the target reference point is a significant determinant of management-led buyout mergers, while the bidder reference point has a significant impact on the probability of the bidder launching a hostile bid. In Essay II, I focus on the impact of the target and bidder reference points on the method of payment in the context of what the target seeks, what the bidder offers, and what the two parties use as their final method of payment. The analysis is performed under general economic conditions and in strong/weak economic periods. I find that while the target reference point has a strong impact on the method of payment agreed upon between the two parties, the bidder reference point does not. This is especially important given that the bidder reference point influences the consideration offered by the bidder but does not translate into a significant impact on the final method of payment. In essay III, I examine the impact of bidder reference point on public targets and the impact of bidder and target reference points on private firms. I analyze the aforementioned relationships under different economic conditions. Consistent with the literature on premium and public targets, I find that the target reference point has a strong and positive relationship with the premium paid for private firms. The relationship is stronger in weak economic times., At the same time, I do not find any evidence that the bidder reference point exerts a significant influence on the premium paid for public firms. Interestingly, the relationship between the bidder reference point and the premium paid for private firms is negative and significant.
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Date Issued: 2013
PURL: http://purl.flvc.org/FAU/3360773
Subject Headings: Consolidation and merger of corporations, Market segmentation, Negotiation in business, Industrial management
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.
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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: 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.
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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)

Title: Determinants of the wealth effects resulting from direct foreign investments: 1980-1989.
Creator: Picou, Armand E., Florida Atlantic University, Madura, Jeff
Abstract/Description: This study empirically investigates direct foreign investments, acquisitions and partial acquisitions with a U.S. firm, from 1980 through 1989. The primary purpose of this study is two-fold: (1) establish the overall effect of direct foreign investments on shareholder wealth surrounding the announcement (the short-term share price reaction) and over a three-year period after the announcement (the long-term share price reaction) and (2) form a greater understanding of the variables influencing...
Show moreThis study empirically investigates direct foreign investments, acquisitions and partial acquisitions with a U.S. firm, from 1980 through 1989. The primary purpose of this study is two-fold: (1) establish the overall effect of direct foreign investments on shareholder wealth surrounding the announcement (the short-term share price reaction) and over a three-year period after the announcement (the long-term share price reaction) and (2) form a greater understanding of the variables influencing the shareholder wealth effect of direct foreign investments. The overall short-term share price reaction is negative but insignificant for U.S firms acquiring foreign firms, positive and significant for U.S. firms partially acquiring foreign firms, and positive and significant for U.S. targets partially acquired by foreign firms. The overall long-term share price reaction is negative and significant for each of the previous three group of U.S. firms, yet positive and significant for foreign targets partially acquired by U.S. firms and negative but insignificant for foreign firms partially acquiring U.S. firms. The variables influencing each group of U.S. firms are a firm's name recognition, the exchange rate, investment in a related industry, investment in a developed country, and the presence of a previous international expansion.
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Date Issued: 1992
PURL: http://purl.flvc.org/fcla/dt/12315
Subject Headings: Consolidation and Merger of Corporations--Economic aspects, Investments, Foreign--Economic Aspects, Stockholders
Format: Document (PDF)

Title: The implications and wealth effects of acquisitions by investment bankers.
Creator: Chambliss, Karen., Florida Atlantic University, McCarty, Daniel E.
Abstract/Description: The purpose of this study is to develop and empirically test theories on wealth effects surrounding acquisitions by investment bankers. The primary research objective deals with strong-form market efficiency. The test strives to determine if the results of information held by investment bankers are attributable to inside information or information that is available to anyone willing to research and analyze particular target firms. A second research objective is to examine why larger wealth...
Show moreThe purpose of this study is to develop and empirically test theories on wealth effects surrounding acquisitions by investment bankers. The primary research objective deals with strong-form market efficiency. The test strives to determine if the results of information held by investment bankers are attributable to inside information or information that is available to anyone willing to research and analyze particular target firms. A second research objective is to examine why larger wealth effects are expected. Potential reasons examined include internal and external governance issues, as well as acquisition activity as a means of governance. Specific issues examined are (1) a change in the chief executive officer after acquisition, (2) a change in the board of directors after acquisition, (3) an increase in the debt ratio of the target firm after acquisition, (4) downsizing and/or exiting from an industry after acquisition, and (5) to stop the selection of poor acquisitions by the target firm. The relative size of the acquisitions is controlled for in both groups; economies of scale realized from horizontal or vertical acquisitions are controlled for in the case of the control group. A comparison of the wealth gains between the two groups reveals that investment bankers outperform non-investment bankers when the average holding period abnormal return is used as the wealth measure. However, when cumulative average abnormal returns are compared, the non-investment banker group realizes higher wealth gains than the investment bankers. In no case does either group outperform a market index, the S&P 500. The results of the wealth effect tests support strong-form market efficiency; investment bankers do not utilize private information to realize gains from closely-held information. Primarily, downsizing is associated with positive effects on the stock price returns of target firms in partial acquisitions by investment bankers. Non-investment banker partial acquisitions are characterized with a change in the chief executive officer of the target firm. This change, however, is negatively associated with the share price returns of the target firms.
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Date Issued: 1995
PURL: http://purl.flvc.org/fcla/dt/12399
Subject Headings: Investment banking, Consolidation and merger of corporations--United States, Stockholders--United States, Capitalists and financiers--United States
Format: Document (PDF)

Title: Target stock price runup prior to acquisitions.
Creator: Brigida, Matthew David., College of Business, Department of Finance
Abstract/Description: Information leakage before full acquisitions has been widely documented. The information leakage, and the resulting pre-bid runup in the target's stock, generally increases the total cost of the acquisition. That is, information leakage and the ensuing pre-bid runup is a gain to the target and loss to the acquirer. Herein, I first ascertain the characteristics of full acquisitions that affect the amount of information leakage. I find that if the acquirer borrows to finance the acquisition...
Show moreInformation leakage before full acquisitions has been widely documented. The information leakage, and the resulting pre-bid runup in the target's stock, generally increases the total cost of the acquisition. That is, information leakage and the ensuing pre-bid runup is a gain to the target and loss to the acquirer. Herein, I first ascertain the characteristics of full acquisitions that affect the amount of information leakage. I find that if the acquirer borrows to finance the acquisition then information leakage is greater. Further if the acquirer is foreign, if the target is a high-tech firm, and if the target has options on its stock all increase information leakage. I find hostile deals are effective in reducing information leakage. Lastly, information leakage increases in the percentage of managerial ownership. I next hypothesize that the identity and intent of partial acquirers is known to market participants before the announcement of a partial acquisition. I find that the market can anticipate whether a partial acquirer intends to fully-acquire or take an active role in the management of the target. Also, the market anticipates whether the acquirer is a private investment find or a non-financial corporation. Further, the acquirer's identity or intent is fully reflected in the target's stock price before the announcement of the partial acquisition. These results help explain why there are few partial acquisitions as precursors to full acquisitions., I next hypothesize that macroeconomic factors affect information leakage, and may serve as a signal of when to speculate on acquisitions. I find that information leakage is positively related to shocks in both expected economic conditions and financing costs, the latter signaling to speculators that acquisitions are imminent. I also find information about an imminent full acquisition is leaked earlier when there are positive shocks to economic conditions and financing costs.
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Date Issued: 2009
PURL: http://purl.flvc.org/FAU/368613
Subject Headings: Consolidation and merger of corporations, Negotiation in business, Investment analysis, Stocks, Prices, Securities industry, Corrupt practices
Format: Document (PDF)

Title: Essays on takeover defenses and cancellations.
Creator: Glegg, Charmaine A., Florida Atlantic University, Madura, Jeff
Abstract/Description: This dissertation analyzes the impact of takeover defenses and cancellations in three essays: (1) The Impact of the Strength of Targets' Takeover Defense Mechanisms on Acquiring Firms; (2) The Impact of the Announcement of Shareholder-Friendly Poison Pill Provisions on Shareholder Wealth; and (3) The Relation between Short Interest Positions and Acquisition Withdrawal Announcements. The first essay examines the impact of the strength of target firms' takeover defenses on acquiring firms'...
Show moreThis dissertation analyzes the impact of takeover defenses and cancellations in three essays: (1) The Impact of the Strength of Targets' Takeover Defense Mechanisms on Acquiring Firms; (2) The Impact of the Announcement of Shareholder-Friendly Poison Pill Provisions on Shareholder Wealth; and (3) The Relation between Short Interest Positions and Acquisition Withdrawal Announcements. The first essay examines the impact of the strength of target firms' takeover defenses on acquiring firms' probability of successfully completing takeover deals, acquiring firms' takeover wealth effects, and their long-term performance. The evidence indicates that acquirers are more likely to complete takeovers if targets have weaker defenses. Additionally, acquisition announcement cumulative abnormal returns are lower for acquirers bidding on targets with stronger defenses. However, acquiring firms underperform in the long-run, which has limited relation with targets' takeover defense strengths. The second essay examines the market's reaction to announcements of the adoption of shareholder-friendly poison pills. The market's reaction is generally favorable to poison pill announcements. Cumulative abnormal returns surrounding friendly poison pill adoptions are positive and statistically significant. Additionally, adoptions of poison pills with sunset and TIDE provisions are positively and significantly related to poison pill announcement wealth effects. However, dead hand and fiduciary out provisions have significant inverse relation with poison pill announcement cumulative abnormal returns. Poison pills with chewable, no hand, and adverse persons clauses do not significantly explain cumulative abnormal returns. The cancellation study analyzes abnormal short selling interests in target firms in the month prior to the announcement of a cancelled takeover bid. Average short selling levels are 4 or 5 times higher than normal short selling levels in the month prior to the announcement of takeover bid cancellation, and are negatively related to announcement wealth effects. These initial findings imply that short sellers may be able to anticipate the negative wealth effects associated with deal failure, and hence increase short interests to benefit from target's (albeit brief) decline in value. However, further analyses point to short sellers using market-to-fundamentals strategies, and imply that increased abnormal short selling in the month prior to the announcement of cancelled takeover bids may be coincidental.
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Date Issued: 2006
PURL: http://purl.flvc.org/fcla/dt/12222
Subject Headings: Consolidation and merger of corporations--United States--Prevention, Corporate governance--United States, Tender offers (Securities)--United States, Actions and defenses--United States
Format: Document (PDF)

Title: Essays on Takeovers of Privately-Held Targets.
Creator: Ngo, Thanh, Madura, Jeff, Florida Atlantic University
Abstract/Description: Takeovers of privately-held targets have outnumbered takeovers of publiclytraded targets over the years. This dissertation focuses on takeover activities of privatelyheld targets and examines several important issues which have never been touched on in the literature. The first essay examines the factors that determine the choice between a privately-held target and a publicly-traded target. After the size of the target and the prevalence of private firms in each industry in each year are...
Show moreTakeovers of privately-held targets have outnumbered takeovers of publiclytraded targets over the years. This dissertation focuses on takeover activities of privatelyheld targets and examines several important issues which have never been touched on in the literature. The first essay examines the factors that determine the choice between a privately-held target and a publicly-traded target. After the size of the target and the prevalence of private firms in each industry in each year are controlled for, I find that the stock bidder tends to target a privately-held firm and the cash bidder tends to target a publicly-traded firm when pursuing a high-tech target. When acquiring a firm in the same industry and being inexperienced in takeover activities, the bidder is more likely to target a publicly-traded firm as opposed to a privately-held firm. The passage of the SarbanesOxley Act (SOX) also has an affect on the choice of a privately-held target or a publiclytraded target; everything else being equal, the cash bidder is more likely choose to acquire a private firm while the stock bidder is less likely to choose a private firm upon the introduction of SOX. The second essay examines the factors that influence the choice of stock versus cash payment in takeovers of privately-held targets. Stock is found to be more frequently used among takeovers in which the bidding firm has more debt and less free cash flow prior to the deal , the target is a high-tech firm, and the target management is retained in the combined entity. In addition, since the adoption of SOX, cash has been used more frequently and to greater extent among the sample of takeovers of privatelyheld targets. The third essay examines the effects of restrictions on resale of stock issued in takeovers on the bidder's wealth effect and long-run stock price performance. I find that restrictions on resale of stock are more popular among takeovers of privately-held targets as compared to takeovers of publicly-traded targets. Restrictions on resale are found to be positively related to the bidder's announcement abnormal return and negatively related to the bidder's long-run stock price performance.
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Date Issued: 2007
PURL: http://purl.flvc.org/fau/fd/FA00000608
Subject Headings: United States --Sarbanes-Oxley Act of 2002, Consolidation and Merger of Corporations--United States, Success in Business, Sale of Business Enterprises
Format: Document (PDF)

Consolidation and merger of corporations (12)	+ -
Negotiation in business (4)	+ -
Corporations--Finance (3)	+ -
Corporate reorganizations (2)	+ -
Corporations (2)	+ -

Finance (2)	+ -
Industrial management (2)	+ -
Strategic planning (2)	+ -
Actions and defenses--United States (1)	+ -
Banks and banking (1)	+ -
Capitalists and financiers--United States (1)	+ -
Conglomerate corporations (1)	+ -
Consolidation and Merger of Corporations (1)	+ -
Consolidation and Merger of Corporations--Economic aspects (1)	+ -
Consolidation and Merger of Corporations--United States (1)	+ -
Consolidation and merger of corporations--Management (1)	+ -
Consolidation and merger of corporations--United States (1)	+ -
Consolidation and merger of corporations--United States--Prevention (1)	+ -
Consolidation and merger of corporations -- Psychological aspects (1)	+ -
Consolidation and merger of corporations -- Social aspects (1)	+ -
Corporate culture (1)	+ -
Corporate divestiture--United States (1)	+ -
Corporate governance (1)	+ -
Corporate governance--United States (1)	+ -
Corporate reorganizations--United States (1)	+ -
Corporations--Sociological aspects (1)	+ -
Corrupt practices (1)	+ -
Financial risk management (1)	+ -
Financial services industry (1)	+ -
Going Public (Securities) (1)	+ -

College of Business (11)	+ -
Florida Atlantic University (11)	+ -
Department of Finance (7)	+ -
Madura, Jeff (7)	+ -
Department of Management (3)	+ -

Benou, Georgia. (1)	+ -
Brigida, Matthew David. (1)	+ -
Cao, Kien. (1)	+ -
Chambliss, Karen. (1)	+ -
Chira, Inga. (1)	+ -
Coy, Jeffrey M. (1)	+ -
Davis, Sean M. (1)	+ -
Ellis, Kimberly (1)	+ -
Ellis, Kimberly M. (1)	+ -
Faifman, Leon (1)	+ -
Finance (1)	+ -
Glambosky, Mina C. (1)	+ -
Glegg, Charmaine A. (1)	+ -
Golden, Peggy (1)	+ -
Harris, Oneil M. (1)	+ -
Hudson, Bryant A. (1)	+ -
McCarty, Daniel E. (1)	+ -
Murdock, Maryna. (1)	+ -
Ngo, Thanh (1)	+ -
Parola, Heather R. (1)	+ -
Picou, Armand E. (1)	+ -
Spencer, Carolyn A. (1)	+ -
Susnjara, Jurica. (1)	+ -
Wiggenhorn, Joan (1)	+ -
Yapici, Nilufer (1)	+ -

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