The Relation Among Targets' R&D Activities, Acquirers' Returns, and In-Process R&D in the US

Abstract:  Using a sample of 129 mergers and acquisitions (M&As) in the US between publicly traded acquirers and targets in research and development (R&D) intensive industries over the period of 1994-2004 and a size- and industry-matched sample, we examine the relation among targets' R&D activities, the probability of acquirers' writing-off in-process R&D (IPRD), and acquirers' returns around the time of M&A announcements. We find that firms acquiring targets with higher R&D investments tend to write off some of the acquired R&D assets upon the completion of the M&As. We also find that the median cumulative abnormal return during the three days around M&A announcements for acquirers with subsequent IPRD write-offs is −2.73% while the return for acquirers without IPRD write-offs is −0.60%. This suggests that acquirers' stock returns around M&A announcements are much lower when investors expect acquirers to expense IPRD. The results are consistent with our conjecture that acquirers tend to write-off IPRD when they acquire overvalued targets. We also find that IPRD write-offs do not increase earnings or stock returns of acquirers after M&As, which is inconsistent with an earnings management hypothesis.     

Does Institutional Blockholder Short‐Termism Lead to Managerial Myopia? Evidence from Income Smoothing

We examine institutional blockholders’ influence on income‐smoothing practices in the Korean market, which provides an interesting setting where family‐oriented chaebols dictate the corporate landscape and impede shareholder activism. The empirical results reveal that institutional shareholders with a short‐term (long‐term) investment horizon facilitate (constrain) managerial myopia. This positive (negative) association is most evident among firms with domestic institutional investors. Therefore, we argue that the presence of domestic institutional investors with transient investment goals incentivizes firms’ management to smooth out earnings.     

Is it still economic to build a new coal-fired power plant in the U.S.? A real option analysis

In the U.S., virtually no new coal-fired power plants have been built in recent years. Both industry experts and academics seem to believe that no rational firm will build a new coal-fired plant. Will such a trend continue in the future? To provide insights into this question, we investigate the optimal decision of an electricity company with an irreversible and deferrable opportunity to build either a new coal-fired or natural gas-fired power plant as its new base-load resource. According to our real option analysis, the optimal decision depends on the location. In the case of the eastern U.S., it is optimal to choose a natural gas plant if a firm is given a choice among a new natural gas plant, a new coal plant and deferring the investment. However, contrary to the common sentiment in the industry and academia, building a new coal plant in the western U.S. is still more economical than building a new natural gas plant in the absence of emission pricing. Furthermore, introducing carbon pricing to western U.S. states, as California did, can substantially increase the probability that a firm will optimally choose a natural gas plant over a coal plant.     

Corroborating social media echelon in cancer research

Worldwide medical facilities differ, and for this reason, the causes of death can vary. Cancer is considered the second leading cause of death after heart disease worldwide, and the same causes of death are observed in the United States (US). Therefore, the purposes of this study are to explore worldwide research levels in the field of cancer and the social collaboration of researchers and institutions in this field. This article examines the structural patterns of international co-authors and co-institutions in science citation index papers in cancer research. The study uses measures from the social network analysis method, including degree centrality, betweenness centrality, eigenvector centrality, and effectiveness, to investigate the effects of social networks in the area of cancer research. Empirical analysis results identify the US is the most central country, followed by Germany, Italy, France, and China, in terms of co-authored networks in this research field. Institutional analysis results indicate that the University of Milan is at the top in terms of degree centrality. The Gustave Roussy Cancer Campus in France and German University of Düsseldorf occupy the second and fourth positions, respectively. The University of California in Los Angeles and Harvard University, both in the US, are at third and fifth positions, respectively.     

The price effect of allowing non-pharmacy outlets to sell OTC drugs in Korea

By the amendment of the Pharmaceutical Affairs Act in 2012, non-pharmacy outlets (confined to 24-hour convenience stores) in Korea were permitted to sell 13 over-the-counter (OTC) drugs. This article empirically examines the effect of the regulatory reform on OTC drug prices. To do so, we use county-level price data of 7 OTC drugs for the years of 2012 and 2013. Among them, 2 OTC drugs are available at non-pharmacy outlets due to the deregulation, and the remaining 5 are still only available at pharmacies. Employing a difference-in-differences estimation strategy, we find that after the regulatory reform, prices of the 2 OTC drugs increased by only 1.1% while those of the rest 5 increased by 6.5%. This result has implications for the government’s policy of designating non-pharmacy outlets that can sell OTC drugs from the viewpoint of consumer welfare.     

中美技术密集型产品双边贸易研究——显性比较优势、产业内贸易与贸易平衡研究

资本技术密集型的机械及运输设备产品已经成为中美贸易的主体,且中国对美出口不断扩大。本文以该类产品为研究对象,借助于显性比较优势指数,揭示中美的优势;运用产业内贸易调整指数,说明两国间产业内贸易状况;运用产业内贸易失衡指数,指出该大类下对两国间贸易失衡起到推动和缓解作用的产品;借助于动态产业内贸易指数,分析中美间该大类贸易平衡状况的未来走势。     

Auditor Quality,IFRS Adoption,and Stock Price Crash Risk: Korean Evidence

This paper investigates the relationship among auditor quality, International Financial Reporting Standard (IFRS) adoption and stock price crash risk. Using 657 unique listed companies spanning 2002–2014 in Korea, this study finds that stock price crash risk decreases, especially for firms using Big 4 auditors, after IFRS adoption in Korea. Stock price crash risk decreases for a firm included in Big 4 auditors, while it does not increase for a firm excluded from Big 4 auditors after IFRS adoption. Finally, this study finds that Big 4 auditor decreases stock price crash risk only when the firm size is above-median.     

How does the partner type in R&D alliances impact technological innovation performance? A study on the Korean biotechnology industry

The number of strategic alliances for R&D activities in the biotechnology industry is sharply increasing. Some studies show that each alliance partner type has different alliance motives, resources and capabilities, organizational structures and cultures, and degrees of competition with partners, which can lead to different performances of strategic alliances. In this regard, this study conducts an empirical analysis of the different impact of each type of alliance partner on technological innovation performance and finds the moderating effect of absorptive capacity and potential competition by categorizing strategic alliances for R&D activities in the biotechnology industry into three types: vertical-downstream alliances, vertical-upstream alliances, and horizontal alliances. This study analyzed 206 Korean biotechnology firms and their strategic alliances for a total of 292 R&D activities. The results of the analysis showed that vertical alliances have a positive impact on technological innovation performance, while horizontal alliances have an inverted U-shaped relationship with technological innovation performance caused by the effect of competition. Additionally, it was confirmed that the R&D intensity of biotechnology firms has a moderating effect of increasing the impact of vertical-upstream alliances on technological innovation performance.     

政府扶持物流发展的几个博弈问题

中国加入WTO,物流产业面临着前所未有的机遇和挑战,政府和企业所要进行的工作任重道远。我国物流现状远远落后于发达国家,政府作为国家重要基础设施的掌控者和国家宏观经济调控的决策者,应加大力度从宏观和微观的角度支持物流产业的发展,对相关扶持进行博弈决策。     

兵团加快发展产业聚集园区思路与对策——国家级石河子经济技术开发区建设经验借鉴

兵团的各类产业聚集园区作为推进兵团城镇化、新型工业化、农业产业化的重要载体,如何整合各方有效资源快速推进各类产业聚集园区发展是兵团今后一个时期的一项战略任务。国家级石河子经济技术开发区的发展为兵团建设各类产业园区提供发展思路和经验借鉴。