Does Foreign Direct Investment Induce Domestic Mergers?

This paper examines the impact of foreign firm entry on the industry consolidation process in a host country that operates through mergers and exits of incumbent firms. Using a three-stage oligopolistic model, the paper shows that foreign direct investment (FDI) may trigger consolidation via a merger since the approval of a domestic merger by the antitrust authority is more likely in the case a foreign firm enters via FDI and a firm’s incentive for a domestic merger is greater and that, in turn, the possibility to merge and become more efficient modifies the outcome of the game by making FDI compared to exports less likely.     

Let’s Not Stick Together: Anticipation of Cartel and Merger Control in The Netherlands

Does enforcement action by the Netherlands Competition Authority (NMa) in the case of cartels and mergers produce an anticipatory effect? We use surveys among firms and their advisers to test whether merger plans that may fail to gain clearance from the NMa are not notified and whether the possibility of detection helps to reduce the number of cartels. Our results indicate that enforcement action by the NMa has a preventive effect. Surveys among companies show that 5 % of the notified mergers were modified before notification to forestall possible objections from the NMa. Moreover, for every 100 notifications of mergers there are 13 proposed mergers that are later on abandoned due to merger control. Companies also take account of the Competition Act when drafting contracts, conducting negotiations and holding meetings. Our survey among lawyers and other advisers shows that for every sanction decision taken by the NMa there are almost 5 cases in which, unbeknown to the NMa, a prohibited act has been terminated or modified in response to advice on competition law.     

Determinants of cross-border merger premia

Firms have a broad range of rationales for engaging in cross-border mergers and other forms of foreign direct investment (FDI); while some companies are in search of the cost advantages provided by foreign resources, other firms are primarily interested in gaining access to new markets. Although a significant amount of research has explored the patterns of FDI, little work has been done to assess what influences the value of cross-border mergers and, in particular, what determines why some cross-border mergers are expected to result in higher synergies when compared to others. This paper explores what characteristics of a merger are expected to increase the synergies that a firm will accrue from a cross-border merger by testing how a variety of factors impact the premia paid to effectuate a cross-border merger. We find that firms are willing to pay a higher premium to obtain greater control over foreign firms, and that this control is even more important in mergers involving firms in emerging markets. We also find that the factors affecting deal premia in cross-border mergers differ based on whether the acquirer has a high or low intangible asset intensity level.     

Profitable Mergers in a Cournot Model of Spatial Competition

This paper investigates the profitability and locational effects of mergers when Cournot firms compete in spatially differentiated markets. A two-firm merger is generally profitable because the merged partners can coordinate their location decisions. The merged firm locates its plants outside the market quartiles with distance from the market center being an increasing function of the number of nonmerged firms remaining at the market center. Profitable two-firm mergers reduce competitive pressure, leading to higher prices and reduced consumer surplus. The merger increases total surplus by increased locational efficiency and the increased profits of the merged and nonmerged firms.     

THE GLOBAL BANK MERGER WAVE: IMPLICATIONS FOR DEVELOPING COUNTRIES

This paper reconsiders causes and implications of the global bank merger wave, especially for developing economies. Previous studies of the global bank mergers—that is, mergers between banks from different nations—had assumed that these combinations are efficiency‐driven, and that the U.S. case defines the paradigm for all other nations' banking systems. This paper argues that the U.S. experience is unique, not paradigmatic, and that bank mergers are not efficiency‐driven; instead, this merger wave has arisen because of macrostructural circumstances and because of shifts over time in banks' strategic motives. This paper argues that large, offshore banks often engage in cross‐border mergers because they want to provide financial services to households and firms that have reached minimal threshold wealth levels. For developing economies, this suggests that cross‐border acquisitions of local banks by offshore banks will have mixed effects; and it cannot be assumed that the net social impact is positive.     

Union status and merger activity in the U.S.

Theories on merger activity and union membership suggest that conglomerate mergers should enhance the probability of managers employing nonunion workers, while nonconglomerate mergers should be associated with a greater probability of union membership. To test this hypothesis, a standard sample-selection derived union status equation is estimated which includes measures of three types of merger activity as explanatory variables. The findings suggest that being in an industry with substantial conglomerate mergers reduces the chance that a worker is a union member. All other types of mergers are positively associated with the probability of union membership. This pattern holds even after controlling for the possibility of merger endogeneity.     

The effect of mergers on employment and wages: Evidence from Japan

This study investigates the impact of mergers on employment and employees’ wages in Japan, based on 111 mergers between listed firms observed between 1990 and 2003. Typically, the number of employees decreases by 4.45% three years after a merger, even after changes in sales and other variables are controlled. Firms that experience related mergers, and rescue mergers are more likely to decrease the number of workers. At the same time, wages increase by 5.46% per employee. These results suggest that the main motivation behind mergers is not to divest employees of their wealth.     

跨国并购和国内并购对企业市场价值的影响及差异:来自中国企业的证据

文章利用2004~2015年BVD(Zephyr)的并购事件研究了中国企业跨国并购和国内并购对企业市场价值影响的差异。事件研究得到以下结论:第一,在公告日窗口两类并购都获得了非负异常收益率,且国内并购的异常收益率不低于跨国并购。第二,分跨国并购目标国来看,如果并购发达国家企业,则获得了非负异常收益率,且两类并购对企业市场价值的影响无显著差异;如果并购发展中国家企业,则没有显著异常收益率,且不高于国内并购。第三,从细分行业来看,高新技术行业的跨国并购没有获得显著异常收益率,且不高于国内并购;无论是传统制造业还是非制造业,国内并购都获得了非负异常收益率,且不低于跨国并购。在此基础上文章利用倾向得分匹配法和倍差法检验了跨国并购与国内并购对企业异常收益率影响的差异,研究发现国内并购创造的市场价值明显高于跨国并购。因此,市场对中国企业的国内并购做出了更加积极的评价。     

Did the 1998 Merger of Price Waterhouse and Coopers & Lybrand Increase Audit Quality?

We examine the effects of the 1998 merger of Price Waterhouse (PW) and Coopers & Lybrand (CL) on the audit quality of the merged firm PricewaterhouseCoopers (PwC) at both the firm and office levels, where audit quality is surrogated by the auditor's propensity to issue a going‐concern opinion, clients’ likelihood of meeting or beating analysts’ earnings forecasts, and clients’ accrual quality. At the firm level, we find that the merger increased audit quality for PwC relative to the audit quality of the other Big N firms. At the office level, our findings, albeit mixed, collectively suggest that the improvement in firm‐level audit quality was likely driven by the improvement in audit quality at PwC's overlapping offices, that is, offices in cities where both PW and CL had separate offices prior to the merger. Further, our findings suggest that although the PW/CL merger increased auditor concentration in local audit markets with PwC overlapping offices, the merger improved (rather than hurt) audit quality in those markets. Overall, our study contributes to the extant sparse literature on the effect of Big N mergers on audit quality, and is of potential interest to regulators.     

跨国公司在华并购与隐性垄断

在当前全球化浪潮中,跨国并购已成为跨国投资的主要方式,更是我国今后引资的重要趋势。然而这种不同性质的多种资本主体并存于中国市场的特质将直接决定彼此的生存空间和获利机会,并最终决定投资的绩效和宏观经济稳定性。分析跨国公司进入中国市场的方式和在中国市场上进行竞争的手段,并从品牌、技术和币场占有率三个方面考察跨国并购对我国市场结构的影响,可以得出已经形成隐性垄断的结论,相应地从企业和政府两个层面提出对跨国并购实施竞争规制的应对策略。     

Endogenous Efficiency Gains from Mergers

This article analyzes endogenous efficiency gains from mergers. It considers oligopolistic homogeneous good markets and duopolistic and triopolistic markets under product differentiation (PD) (quantity and price competition). In a two‐stage game, firms invest in cost‐reducing innovation (with and without mergers) and then compete in output/prices. It is found that in homogeneous good markets, all possible mergers generate efficiency gains, and that these are most significant when R&D spillovers are very low or very high. Efficiency gains increase with the number of insiders and generally decrease with the number of outsiders. With PD, in most cases, the merger generates efficiency gains when spillovers and/or PD are sufficiently high. With PD, efficiency gains increase with spillovers, but may increase or decrease with the level of PD. The implications of the results for the relationship between competition and innovation outputs and for merger policy are discussed.     

Did mergers help Japanese mega-banks avoid failure? Analysis of the distance to default of banks

This paper applied the distance to default (DD) measure to five mergers among large Japanese banks during the crisis period. The DD helps us analyze whether mergers that took place in the late 1990s and 2000s made the merged banks financially more robust, as intended. Our findings include: (1) A merged bank fundamentally inherits financial soundness of premerged banks, without incremental value from the merger; and (2) A negative DD was observed following the merger. The findings of this case study are consistent with the view that large Japanese banks’ mergers either failed to implement intended scale economies or were motivated by a belief in the too-big-to-fail policy.     

产品范围选择、替代关系调整与兼并效应分析

文章考察了横向兼并所形成的新企业进行产品范围选择以及替代关系调整时,兼并行为所产生的效应问题：通过一个3企业的两阶段博弈研究了兼并行为对行业内各企业的净利润以及对社会福利所产生的影响。结果表明企业普遍存在兼并动机;兼并所形成的新企业选择保留原有产品范围时,如果替代系数降低的幅度比较大,整个社会的福利将会增加。     

Simulating the Effects of Railroad Mergers

The purpose of this paper is to add to the empirical literature regarding merger simulation analysis by examining the effect of railroad mergers on railroad market power. This is done by measuring railroad profits and revenue/variable cost ratios corresponding to different degrees of intrarailroad competition for movements of Kansas export wheat to Houston, Texas. Two models are developed to achieve the objectives of the study. A network model of the wheat logistics system is used to identify the least cost transportation routes from the Kansas study area to the market at Houston. A profit improvement algorithm, which identifies Nash equilibrium prices, is developed to measure the amount by which railroads can profitably raise their prices above variable cost. The results of the study have implications for U.S. railroad merger policy. The paper indicates that railroad mergers do not necessarily increase railroad market power or make railroad shippers worse off. Instead, the study demonstrates that the impact of railroad mergers on shippers and railroads depends on factors that vary geographically, such as the degree of intrarailroad and intermodal competition in the area.     

A measure of the synergy in mergers under a competitive market for corporate control

Summary and Conclusion This note developed a possible measure of the anticipated synergy in mergers under the assumption that the market for corporate control is competitive. By applying Tobin'sq theory of investment, a measure which is composed of three potentially measurable variables is derived. The three variables are: the acquisition premium paid by he buying firm, the market value, and the replacement costs of the target firm. This measure may be utilized to do empirical studies involving the synergy in mergers regardless of the type of the merger and the source of the synergy. When the market for corporate control is not necessarily competitive, the inequality version of the measure gives the lower bound of the anticipated synergy and upper bound of the premium. In the special case of conglomerate mergers where economies of scope is the only source of synergy, the measure may also be interpreted as the present value of the anticipated economies of scope.     

Exchange rate volatility and first-time entry by multinational firms

The model and related empirical examination in this paper demonstrate one reason why previous studies document both positive and negative correlations between exchange rate volatility and observed levels of foreign direct investment. Using a simple model of cross-border mergers and acquisitions, it argues that the source of the volatility is important in resolving the puzzle. An empirical analysis of mergers and acquisitions by individual firms reveal that first-time foreign direct investment is discouraged by monetary volatility originating from the source-country, but can be encouraged by monetary volatility originating in the host country, especially when compared to domestic investment or expansion by existing multinationals. The regressions also reveal a large and positive “euro effect” on the number of first-time cross-border mergers within the European Monetary Union, even when controlling for domestic merger activity.     

Abnormal Accruals and Managerial Intent: Evidence from the Timing of Merger Announcements and Completions

We examine acquiring managers' opportunistic reporting behavior around stock‐for‐stock acquisitions. Using the timing of merger announcements and completions to infer managerial intent, we show that acquirers with the most inflated earnings tend to announce mergers on Fridays, and that they manage earnings several quarters before the merger announcement date. Friday announcers exhibit a stronger negative association between pre‐merger announcement abnormal accruals and post‐merger announcement market performance than non‐Friday announcers. This effect is driven mainly by mergers that are completed relatively quickly after they are announced. Overall, the evidence supports the notion that some acquiring managers inflate earnings prior to announcing the mergers, and time the merger announcements to exploit investor inattention.     

The differential information content of earnings announcements: The case of merger*

Abstract. The differential information content hypothesis implies that the magnitude of the abnormal return is a function of firm characteristics such as size or quality of reported earnings. Previous studies, however, provide little linkage to the relationship between firm characteristic changes and stock return behavior around the earnings announcement date. This study examines this relationship with 102 sample firms that experienced mergers from 1977 to 1984. For a sample of firms whose future uncertainty (measured by firm variance) was reduced by merger, a significant reduction in the marginal information content of the earnings announcement after merger was observed. This reduction did not occur, however, for variance-increasing merger firms or for pair-matched control firms. Similar results were obtained when the firm's future uncertainty was measured by merger type classified by how closely industries of merging firms were related. Résumé. L'hypothèse du contenu marginal en information veut que l'ampleur du rendement anormal soit fonction des caractéristiques de l'entreprise telles que la taille ou la qualité des bénéfices déclarés. Jusqu'à maintenant, les études n'établissent qu'une faible relation entre l'evolution des caractéristiques de l'entreprise et le comportement du rendement des actions, à proximité de la date de déclaration des bénéfices. Les auteurs examinent cette relation auprès d'un échantillon de 102 entreprises qui ont connu des fusions entre 1977 et 1984. Travaillant sur un échantillon d'entreprises dont l'incertitude relative à leur avenir (mesurée selon la fluctuation rapportée par l'entreprise) a été réduite à la faveur de la fusion, les auteurs observent une diminution significative du contenu marginal en information de la déclaration des bénéfices après la fusion. Cependant, cette diminution ne s'est pas produite pour les entreprises issues de fusions qui enregistrent une fluctuation croissante ou pour les entreprises dominantes appariées. Les résultats sont similaires lorsque l'incertitude relative à l'avenir de l'entreprise est mesurée en fonction de la nature de la fusion, classée selon la mesure dans laquelle les secteurs d'activité des entreprises fusionnées sont liés.     

上市公司兼并的方式及其利益流动研究

随着我国资本市场的兴起和发展,作为资本市场重要组成部分的兼并行为越来越活跃,呈现出来的方式也多种多样。兼并过程通常伴随着相关各方之间的利益流动,但是,这种利益流动并不平衡,流通股股东和债权人的利益不能得到保护,兼并机制存在诸多问题。本文试图在对兼并收益进行深入分析的基础之上,对兼并的方式进行分类,并通过案例揭示各种兼并方式的特点,并阐释我国目前兼并过程中的利益流动的问题。然后针对兼并中存在的问题,试图提出一些有益的措施。     

北京市种业企业并购整合风险识别研究

由于种子产业链长、周期短、技术水平要求高,在并购整合过程中缺乏管理经验,使得在实际并购整合过程中存在着大量的并购整合风险。将并购整合过程分为并购前期、并购期和整合期3个阶段,运用ISM模型(解释结构模型)分阶段研究影响种业企业进行并购的各风险因素间的关系及其层次结构,为北京在种业企业并购战略决策实施中有效控制并购整合风险提供参考,从而降低种业企业并购整合风险,促进北京种业发展。