Impact of initial seeds on the growth of biotechnology startups: evidence from the U.S. and Japan

ABSTRACT

We assess the impact of initial seeds on the long-run growth of biotechnology startups, including the response of the capital market, in the U.S. and Japan. For this purpose, we collected a comprehensive dataset of the matched sample of listed firms from their foundations to the post-IPO period. We find that the quality of initial seeds predicts significantly both the level and the growth rate of the patent stock as well as those of the asset size of the U.S. startups, even controlling for their alliances and acquisitions, while it predicts only the level of the patent stock for the Japanese startups. Furthermore, the asset growth and the patent stock growth in turn account for the market value performances of the U.S. firms much more significantly than those of the Japanese firms. On the other hand, there are only small differences with respect to the time to IPO and the asset growth through the IPO. These results suggest that higher quality of initial seeds significantly enhanced long-run growth of biotechnology startups in the U.S. but not in Japan, and that the differences in fertility of the initial seeds and in efficiency of the capital market could significantly explain the difference.     

Acquisition through innovation tournaments in high-tech industries: a comparative perspective

Acquisition of innovative firms is a widely observed phenomenon in high-tech industries. On the basis of distinct advantages of large and small firms, in this paper, we build a tournament model with possible acquisition activity of large firms to derive hypotheses on interdependencies between acquisition frequency and post-acquisition success rates. We find empirical support for our hypotheses that (1) acquisitions increase overall innovation output and (2) that the number of acquisitions is higher in industries with larger heterogeneity between established firms and young start-ups. However, our third hypothesis derived from the formal model that innovation success following from acquisitions varies across industries is only partially confirmed.     

Rabbinical perspectives on money in seventeenth-century Ottoman Egypt

Abstract

Episodes of monetary instability in Ottoman Egypt stimulated a discussion of monetary doctrine among Egyptian rabbis. A central issue was the valuation of debts following changes in the value of silver coins. While the leading rabbi of the sixteenth century advocated linkage to gold coins, the rabbis of the seventeenth century adopted valuation by purchasing power and rejected valuation by weight and linkage to gold coins. The rabbis of the seventeenth century differed from their predecessors in two essential respects: they were more critical of traditional Jewish monetary doctrine, and they utilized a much more sophisticated form of economic analysis.     

技术并购能够带来技术创新效应吗 ——收购公司成长潜力视角

选择2009—2017年我国A股高科技产业上市公司并购事件作为研究对象，考察技术并购能否给收购公司带来技术创新效应，以及收购公司成长潜力水平对技术并购与技术创新效应的调节作用，并进一步从两维度区分不同类型技术并购以检验其技术创新效应差异。结果发现：技术并购能够显著带来技术创新产出效应和技术创新促进效应；收购公司成长潜力越大，技术并购带来的技术创新效应越显著。此外，相对技术进入型并购，技术巩固型并购更能给收购公司带来显著技术创新效应，而国内技术并购与跨境技术并购带来的技术创新效应不存在显著差异。     

Foreign acquisition,plant survival,and employment growth

Abstract This paper analyzes the effect of foreign acquisition on survival and employment growth of targets using data on Swedish manufacturing plants. We separate targeted plants into those within Swedish MNEs, Swedish exporting non‐MNEs, and purely domestic firms. The results, controlling for possible endogeneity of acquisition using IV and propensity score matching approaches suggest that acquisition by foreign owners increases the lifetime of the acquired plants only if the plant was an exporter. The effect is robust to controlling for domestic acquisitions and differs between horizontal and vertical acquisitions. We find robust positive employment growth effects only for exporters and only if the takeover is vertical.     

Should countries block foreign takeovers of R&D champions and promote greenfield entry?

Abstract In R&D intensive industries, governments promote greenfield foreign investments, while being sceptical towards foreign acquisitions of domestic high‐quality firms. We develop a theoretical model that shows that foreign acquisitions are conducive to high‐quality targets because of strategic effects on the sales price. However, foreign firms ‘cherry pick’ high‐quality targets to expand R&D rather than to downsize. Otherwise, rivals expand R&D, making the acquisition unprofitable. Thus, our model predicts that acquired affiliates invest more in R&D than greenfield affiliates. Using affiliate data, we find evidence that acquired affiliates have a higher level of sequential R&D intensity than greenfield affiliates.     

Portfolio Composition and Valuation Effects in Emerging Market Economies*

ABSTRACT

The increase in cross-border assets and liabilities of nations with globalization, implies small asset price and currency movements create large wealth changes. The national net external position is increasingly driven by valuation effects, which the current account does not capture. We analyze valuation effects for a group of seven emerging economies, namely Brazil, Colombia, India, Republic of Korea, Mexico, Peru and Turkey for the time period 2005:Q1-2015:Q4 by scrutinizing their external asset portfolio while controlling for country fundamentals. Both asset and liability categories of Direct Investment equity are found to positively impact valuation. Equity liabilities and debt assets of Portfolio Investment positively influence valuation. Debt liabilities of all kinds of investment negatively impact valuation. Countries with stronger currency tend to gain through valuation effects. An appreciated real effective exchange rate is associated with higher valuation gains. We also found non-linear effects of the composition of external debt portfolio by interacting external portfolio and country characteristics. The external portfolio selection of emerging economies (with more in Direct Investment equity liabilities and Portfolio Investment debt assets) in the period has shielded them from global volatility, and enabled valuation gains.     

Multinationals,cross‐border acquisitions and wage dispersion

Abstract We examine the impact of cross‐border acquisitions on intra‐firm wage dispersion using a detailed Swedish linked employer‐employee data set including data on all firms and about 50% of the Swedish labour force with information on job‐tasks and education. Foreign acquisitions of domestic multinationals and local firms increase wage dispersion but so do also other types of cross‐border acquisitions. Hence, it is the acquisition itself rather than foreign ownership that increases wage dispersion. The positive wage effect is concentrated to CEOs and other managers, whereas other groups are either negatively affected or not affected at all.     

Currency internationalization and valuation effects: based on the threshold model

ABSTRACT

Based on the three functions of currency internationalization, including exchange medium, pricing currency and foreign reserve, this paper explores how the degree of currency internationalization affects the impact of the exchange rate and the asset price on valuation effects. Using samples of 161 countries or regions from 2001 to 2016 and the threshold regression method, we find that, firstly, there is a threshold effect of the exchange rate on valuation effects due to currency internationalization. The higher the comprehensive level of currency internationalization is, the greater the positive impact of the exchange rate on valuation effects will be. Secondly, the threshold effect of the asset price on valuation effects due to currency internationalization is not significant because of the high stickiness of asset price. Besides, compared with developed countries, currency internationalization is more important to increase valuation effects through exchange rate channel and asset price channel in developing countries or regions. Finally, there are some differences in the three types of currency internationalization functions. The promotion of exchange medium function will lead to a greater positive impact of the exchange rate on valuation effects, as well as pricing currency function. However, the foreign reserve function has no such effect.     

Acquisition vsus de novo entry: A theoretical appraisal

In this paper we generalize the approach developed in the context of banking competition by Gabszewicz et al. (2011). In an entry/acquisition game, we allow the potential entrant in a vertically differentiated market to offer a variant lying at any level of the quality ladder and playing a priori either the role of acquirer or acquired firm. This more general approach enables to give account of a wider set among the different types of acquisitions taking place worldwide. Not only does it constitute a natural toolbox for representing the choice between acquisition vsus greenfield considered in trade theory, but it also allows to capture the exchange of innovation's ownership via acquisition, as analyzed in the literature of innovation.     

The costs of treating acute heart failure: an economic analysis of the SURVIVE trial

Abstract

Objective: To estimate the incremental cost per life year gained with levosimendan relative to dobutamine in treatment of acute heart failure based on the Survival of Patients with Acute Heart Failure in Need of Intravenous Inotropic Support (SURVIVE) trial.

Methods: SURVIVE enrolled 1,327 patients (levosimendan 664, dobutamine 663) from nine nations with 180-day survival from date of randomisation as the primary endpoint. Hospital resource utilisation was determined via clinical case reports. Unit costs were derived from hospital payment schedules for France, Germany and the UK, and represent a third-party payer perspective. Cost-effectiveness analysis was performed for a subset of the SURVIVE patient population selected in accordance with current levosimendan labeling.

Results: Mortality in the levosimendan group was 26 versus 28% for dobutamine (hazard ratio 0.91, 95% confidence interval 0.74–1.13, p=0.40). Initial hospitalisation length of stay was identical (levosimendan 14.4, dobutamine 14.5, p=0.98). Slightly lower rates of readmission were observed for levosimendan relative to dobutamine at 31 (p=0.13) and 180 days (p=0.23). Mean costs excluding study drug were equivalent for the index admission (levosimendan €5,060, dobutamine €4,952; p=0.91) and complete episode (levosimendan €5,396, dobutamine €5,275; p=0.93).

Conclusion: At an acquisition cost of €600 per vial, there is at least 50% likelihood that levosimendan is cost effective relative to dobutamine if willingness to pay is equal to or greater than €15,000 per life year gained.     

Ostomy appliance prices in Europe

Abstract

Objective: This article aims to compare market prices (i.e., third-party reimbursement and patient co-payment) of one-piece and two-piece colostomy, ileostomy and ureterostomy appliances in Belgium, Denmark, England and the Netherlands in 2005.

Methods: Data were collected through contacts with health authorities, health insurance companies, manufacturers, industry associations and distributors. The price difference between Belgium and another country was expressed as a proportion of the Belgian price.

Results: A total of 64 out of the 72 ostomy appliance products considered were cheaper in Belgium. Prices of one-piece colostomy appliances and two-piece ileostomy appliances were consistently lower in Belgium. The highest prices of ostomy appliances were observed in the Netherlands. Sixteen out of 20 products and 21 out of 25 products were more expensive in Denmark and England, respectively, than in Belgium. Colostomy appliances were more expensive in England than in Belgium.

Conclusions: Market prices varied substantially between countries, indicating that manufacturers adapt their pricing strategy to the policy environment existing in the ostomy appliance market of each country. Also, there appears to be scope for reducing prices in some countries.     

Mergers and acquisitions as a response to the deregulation of the electric power industry: value creation or value destruction?

Many electric utilities, as a response to the deregulation of the electric power industry, adopted a strategy of acquiring other electric or gas utilities. We examine whether these merger and acquisition strategies create value for the utility shareholders and whether the strategies result in superior post-merger operating and stock-price performance relative to utilities that did not grow through acquisitions. We find little evidence that the mergers and acquisitions created long-term value for a fully diversified investor. Furthermore, the stock price and operating performance of the acquirers under performed the stock price and operating performance of a control portfolio of utilities that did not engage in merger activity.      

FEDERAL ACQUISITION OF WATER THROUGH VOLUNTARY TRANSACTIONS FOR ENVIRONMENTAL PURPOSES

Throughout U.S. history public land management agencies have attempted to achieve environmental objectives by relying on a broad range of policy tools, including both regulatory and voluntary mechanisms. An important component of these policies has been oriented toward the acquisition of land or partial interests in land from voluntary sellers. However, it has become clear that preserving or restoring damaged ecosystems increasingly requires more than land and easement acquisitions. The procurement of water for environmental purposes is becoming increasingly common. In some regions such acquisitions also represent a significant share of the local water market activity. Given the increasingly important role these transactions play in achieving federal environmental objectives, it makes sense to consider the alternative mechanisms available that could be used for such acquisitions. This paper examines the situations where the federal government has acquired water for environmental purposes and the extent to which competitive mechanisms—such as auctions—could be used in future acquisition efforts.     

市场估值和过度自信对并购绩效的实证研究

运用事件研究法,以2003—2011年中国的上市公司为样本,针对市场估值和管理者过度自信的相互作用对并购绩效的影响进行多元回归分析。结果发现：不同于过度自信管理者,理性管理者在高估和低估价值时期进行的并购活动都能带来正的超额收益。     

Is attack the best form of defence? A competing risks analysis of acquisition activity in the UK

The primary purpose of this paper is to investigate whethercompanies can use acquisition as a strategy to reduce theirlikelihood of take-over. The determinants of making an acquisitionand being taken over are modelled for the first time withina competing risks framework using two large samples of UK manufacturingcompanies which together cover most of the post-World War IIperiod up to 1990. Our results indicate that, ceteris paribus,companies which make acquisitions can significantly reduce theirconditional probability of being taken over by around one-third,largely through the impact that acquisition has on corporatesize. In this sense, attack, through acquisition, is the bestform of defence against take-over.     

Credit supply,post-acquisition performance and financial constraints

We study the effect of credit supply on the acquisition behaviour of financially constrained (FC) and financially unconstrained (UC) firms. FC firms are likely to conduct acquisitions when credit supply is greater while UC firms can conduct acquisitions whenever a good opportunity arises. We argue that the flexibility unconstrained firms have is valuable. Our empirical results indicate that UC firms outperform FC firms up to 36 months after the acquisition. We also find that increased credit supply increases the probability of conducting mergers and acquisitions (M&As) for FC firms while it has less impact on M&A behaviour of UC firms.     

A Theory of Conflicts of Interest in Banking Relationships

Abstract

This paper highlights a dark side of banking relationships by elucidating the conditions under which a pre-existing relationship between a lending bank and a borrower can be detrimental to positive valuation effects of loan announcements. The effect of a pre-existing relationship is more likely to be negative when the pre-existing loans are large and firms' screening costs are low. A theoretical model shows that loan announcement's positive effect on borrowers' value due to the standard information advantage can be more than offset by the bank's conflict of interest when the bank's asset quality reputation is poor, i.e. when the probability of the bank holding a bad loan is large.     

不同质量能力企业的质量信号选择偏好分析

质量能力提升与质量信号传递是新常态下制造业企业提高产品质量,实现市场需求的重要途径。基于2015年中国企业-员工匹配调查数据,运用Oprobit模型对不同质量能力企业的产品质量信号选择偏好进行研究。结果表明,质量战略能力强的企业更倾向于选择强制性标准或市场性价格作为质量信号传递的载体,质量运营能力强的企业更倾向于选择自愿性商标或强制性标准作为质量信号传递的载体,而质量管控能力对质量信号选择倾向的作用不显著,质量竞争能力强的企业并不认可除品牌外的质量信号作为产品质量能力的效用。基于此,建议加大对标准信息缺失或造假的监管力度,鼓励企业进行第三方认证,降低第三方认证成本,同时鼓励企业进行质量战略能力及品牌能力的建设与提升。