The internationalization of Chinese companies: Firm characteristics, industry effects and corporate governance

A prominent issue in the internationalization of Chinese firms is that many are state-owned enterprises (SOEs) and that corporate governance in China is highly idiosyncratic. This paper identifies firm characteristics, industry effects and corporate governance mechanisms that foster internationalization. We find that Chinese cross-border mergers create shareholder value, but not more than domestic expansions. Corporate governance mechanisms matter, jointly and individually. While state-ownership predicts fewer cross-border mergers, a favourable board structure and corporate transparency explains higher M&A returns. As in more mature markets, firm- and industry-specific determinants also affect M&As in China.     

How Target Shareholders Benefit from Value-Reducing Defensive Strategies in Takeovers

This paper shows that target shareholders can be made better off through the use of certain types of defensive strategies that reduce the value of the target by different amounts for different bidders. In many cases, simply the threat of such strategies can make target shareholders better off. Therefore, empirical tests based on stock price reactions at the adoption of defensive strategies may be underestimating the effect of such strategies. The paper also identifies the necessary characteristics that make these strategies effective and shows that many observed defenses possess similar properties.     

U.S. Airways merger: A strategic variance analysis of changes in post-merger performance

This case provides students the opportunity to apply strategic variance analysis (SVA) methodology in analyzing the performance changes realized in an airline merger. The U.S. Airways–America West merger provides an example of a complex, strategic action that simultaneously impacts firm size, unit pricing and costs, efficiency, and capacity for the combining airlines. This merger provides a rich example for the analysis since it combines U.S. Airways, a higher cost network airline that is geographically focused on the Eastern U.S., with America West, a low cost airline operating primarily along the Western U.S. The case includes merger and acquisition (M&A) theory discussing market power vs. efficiency motives for mergers and discusses the role of the U.S. Department of Justice and Federal Trade Commission in evaluating M&As and their impact on markets. The case asks students to serve as consultants applying the SVA methodology to the past U.S. Airways–America West merger and provide conclusions.     

Directors' Recommendations in Takeovers: An Agency and Governance Analysis

Abstract:   This paper evaluates whether directors of target companies make response recommendations in takeovers which are consistent with the interests of shareholders, by examining the relationship between target director recommendations and associated takeover characteristics and ownership and corporate governance characteristics of target companies. The findings suggest that response recommendations appear to be more closely associated with the self‐interest of directors rather than shareholders' concerns, and that common governance initiatives aimed at aligning the interests of shareholders and managers are ineffective in resolving this agency problem. The results suggest the need for legislative or judicial reforms in Australia to encourage takeover activity and reduce takeover hostility.     

雇佣保护影响企业并购决策吗？

以2004-2017年中国A股上市公司为样本,采用Fraser Institute发布的经济自由度指数,研究雇佣保护对企业并购决策和并购绩效的影响。研究发现,雇佣保护程度越高,企业并购可能性和并购规模越小,且这一关系在劳动密集度较高、受融资约束较大的企业中更强,表明雇佣保护通过降低并购整合收益和限制并购融资能力两种机制对企业并购决策产生影响。通过考察并购经济后果,发现严格的雇佣保护会阻碍全要素生产率的提高和并购利得的实现,进一步佐证了主要研究发现。     

VC investments and global exits

This paper examines exits of UK venture capital backers (VCs) from portfolio companies around the world. Mergers and acquisitions (M&A) are the most frequently used exit route for all investments, both in the UK and abroad. Exit through M&A is particularly common for investments in the UK while the probability of an exit through an initial public offering (IPO) is substantially lower for investments made in the UK than abroad. We are able to explain these country differences in terms of variations in the characteristics of VCs, portfolio companies, legal systems and market conditions. Portfolio companies backed by experienced VCs have high probabilities of exits through M&A or IPO. A successful exit is more likely when a VC syndicate includes an experienced member. The likelihood of a successful exit through M&A, IPO or management buyouts is high in countries with, and at times of, high stock market liquidity. Legal systems that provide more investor protection facilitate exits through IPO or M&A.     

高溢价并购可以带来高市场回报吗?

本文以2001―2019年A股上市公司为研究对象,分析了并购溢价与并购短期市场绩效之间的关系,以及吸收合并、商誉和业绩承诺对两者关系的影响。研究结果表明,并购溢价会显著提升并购短期市场绩效,同时资本市场也存在着并购消息提前泄露的问题。异质性分析结果表明,中国资本市场投资者有追高情绪,吸收合并类并购重组的并购溢价更能促进并购短期市场绩效提升;在经历了2015年A股市场异常波动后,市场回归理性,高商誉、高业绩承诺的高溢价并购无法再显著提升并购短期市场绩效。本文结论丰富了并购溢价与企业价值创造关系的研究,为规范并购交易定价和促进资本市场可持续发展提供了学理支持和政策参考。     

中国外资立法的最新发展和完善

从立法的角度看，中国主要通过三种方式加大吸引外资的力度并逐步加强对外资利用的监管和引导：一是严格遵守入世承诺，扩大外资准入的领域；二是通过对公司法及其配套规章的修订，减少对外商投资企业活动的干涉，增强其活力；三是颁布和完善外资并购的相关立法，为活跃和规范中国并购市场奠定法律基础。     

Target CEO age,ownership decisions,and takeover outcomes

This paper examines the effect of target CEO age, in association with target corporate governance mechanisms, on the ownership decisions and takeover outcomes in eight East and Southeast Asian countries. The results show that acquirers are more likely to select partial-control acquisitions of target firms managed by older CEOs, and that the impact of target CEO age on the partial-control acquisition propensity is much stronger in emerging markets relative to developed economies. The study further finds that target CEO age leads to a lower probability of obtaining desired equity ownership levels compared to unmatched ownership achievements, controlling for target corporate governance structures. The findings also run robustness checks regarding variations in the compulsory acquisition cut-off in the sample countries. Overall, this paper adds to the growing of mainstream corporate governance literature regarding the relevance of CEO personal characteristics in agency problems for corporate decisions.     

The Foundations of Freezeout Laws in Takeovers

We provide an economic basis for permitting freezeouts of nontendering shareholders following successful takeovers. We describe a specific freezeout mechanism based on easily verifiable information that induces desirable efficiency and welfare properties in models of both corporations with widely dispersed shareholdings and corporations with large pivotal shareholders. The mechanism dominates previous proposals along some important dimensions. We also examine takeover premia that arise in the presence of competition among raiders. Our mechanism is closely related to the practice of takeover law in the United States; thus, our analysis may be thought of as analyzing the economic foundations of current regulations.     

The Motivation for Takeovers in the UK

Abstract:  The motives for takeovers in the UK are investigated by examining the correlations between wealth gains for the target and both acquirer wealth gains and total wealth gains. The results are sensitive to whether the gains are measured over a long or short window, the method of measuring abnormal returns, and whether controls are included for the form of the bid consideration and the sign of total bid gains. There is evidence of bids motivated by synergy, but there is also evidence of the presence of hubris and weak evidence of bids with an agency motivation. Once controls for bid consideration and the sign of total gains are introduced the explanatory power of the models increases substantially and diversity of results about bid motivation also increases.     

Cross-Border M&As Involving an Emerging Market

This study analyzes Korean firms’ motives for cross-border M&As, Asia’s representative emerging capital market, from the perspective of financial attributes, and defines the effects of group attributes of cross-border M&As on the wealth of acquiring firms’ shareholders. As for the group attributes of cross-border M&As, shareholders of small firms with high ROA do not like cross-border M&As, because the shareholders of small acquiring firms with sufficient internal growth factors are reluctant to transfer their present wealth to shareholders of foreign target firms. We also verify that the diversification effect with regard to cross-border M&As is accompanied by the diversification discount, but that firms with ample internal funds due to their high ROA like entering into new industries through cross-border M&As. Lastly, when target companies are listed in countries with highly uncertain GDP growth rates, acquiring firms’ value decreased.