Pre-Acquisition Profile of Privately Held Companies Involved in Take-Overs: An Empirical Study

This study addresses the pre-acquisition financial characteristics of privately held, rather small acquiring and acquired companies involved in 143 Belgian take-overs between 1992 and 1994. Specifically, the research examines the profitability, liquidity, financial structure, added value and failure risk using statistical analysis of industryadjusted variables. Our findings show that acquisition is not an alternative to bankruptcy since acquired companies do not report high failure risk, but exhibit higher than industry liquidity and solvency. The acquirers achieve a higher growth rate in total assets and sales than the acquired firms but experience a negative industry-adjusted liquidity and are highly levered, suggesting evidence for a growth-resource mismatch within, but a financial fit between acquirers and their targets.     

Watch What You Say: Job Applicants’ Justice Perceptions From Initial Organizational Correspondence

Although it is a common practice for organizations to communicate with job seekers following application submission, little is known about how applicants react to this correspondence. Drawing from recruitment and organizational justice theories, we explore the possibility that specific correspondence content influences job seekers’ fairness perceptions. Data collected from 119 actual job applicants indicated that providing relevant information about the recruitment process (information adequacy) positively related to informational and interpersonal justice perceptions. However, delivering this information in an interpersonally sensitive manner (information sensitivity) had a stronger impact on interpersonal justice perceptions. Finally, post hoc analyses suggested that incorporating specific content delivered in initial job applicant correspondence could allow recruiting organizations to develop practical, cost‐effective strategies for enhancing job seekers’ fairness perceptions following their application submission. © 2014 Wiley Periodicals, Inc.     

A pricing‐error rule on share distribution in equity joint ventures: The Bayesian approach

Equity joint ventures (EJVs) are a popular governance mode of inter‐firm cooperation that has attracted substantial research attention. The literature, however, still lacks a precise rule for the parents to follow in splitting the equity shares of an EJV, although share distribution is critical to almost all aspects of the co‐ownership relationship. In this study, we fill this literature gap by taking the Bayesian approach to draw a pricing‐error rule on share distribution in EJVs. More specifically, we contend that equity participation by two firms in an EJV allows profit sharing to correct for the errors that they might commit in pricing their inputs to the EJV. For profit sharing to fully nullify such pricing errors, the shares of an EJV must be split between the parent firms in a percentage combination that matches the relative sizes of their pricing errors. Because pricing errors are observable only afterward, share distribution in EJVs resembles a Bayesian process, in which the partners keep updating their estimates on pricing errors to adjust share distribution to a percentage combination that could best nullify their pricing errors. Thus, the eventual outcome of share adjustment is EJV buyout, in that the partner whose pricing errors remain substantial buys out the shares of the other whose pricing errors have become tolerable.