Factors influencing wealth creation from mergers and acquisitions: A meta-analysis

This study analyzes the empirical literature concerning the influence of various factors on shareholder wealth creation in mergers and acquisitions using a multivariate framework. Overall, results indicate that while the target firm's shareholders gain significantly from mergers and acquisitions, those of the bidding firm do not. Findings also indicate that the use of stock financing has a significant impact on the wealth of both the target and bidding firms' shareholders. The presence of multiple bidders and the type of acquisition influence the bidders' return, while regulatory changes and tender offers influence the targets' returns. The paper also provides a comparison of our findings with that of previous narrative reviews and discusses their implications from the viewpoint of managers and researchers.     

Adversary activities and per capita income growth

When some present or future markets are either imperfect or incomplete, the selfish motivations of individual agents may (but not necessarily) lead to rent-seeking activities that can make society worse off. Legal activities tend to raise the costs of doing business. Moreover, because they are biased in the direction of suits by firms and consumers against other firms, they may as a whole lower profit and hence both investment and growth rates relative to what they would be without such activities. This paper uses international cross-section data to provide a simple test of this hypothesis. Despite the crudeness of the test, the small size of the sample and possible ambiguities in interpretation, the results provide a tentative confirmation of the hypothesis.     

Price leadership and firm size asymmetry: an experimental analysis

We use laboratory experiments to examine the effect of firm size asymmetry on the emergence of price leadership in a price-setting duopoly with capacity constraints. Independent of the level of size asymmetry, the unique subgame perfect equilibrium of our timing game predicts that the large firm is the price leader. Experimental data show that price leadership by the large firm is frequent, but simultaneous moves are also often observed. Profit outcomes in the previous period affect the subjects’ decisions to announce or wait in a way that hampers convergence to the equilibrium. Furthermore, while both small and large firms display a strong tendency to wait to announce their price when firm size asymmetry is low, they often set prices early when size asymmetry is high. Prices are higher when price setting is sequential rather than simultaneous and when firm size asymmetry is high. Hence, price leadership by either type of firm has an anti-competitive effect that is more pronounced when the size difference between firms is large.     

Learning with noiseless information and payoff-relevant signals

Summary. In models of active learning or experimentation, agents modify their actions to affect the distribution of a signal that provides information about future payoffs. A standard result in the experimentation literature is that agents experiment, if at all, to increase information. This finding is a direct consequence of Blackwell's theorem: one experiment is more informative than another if and only if all expected utility maximizers prefer to observe the first. Blackwell's theorem presupposes, however, that the observed signal only conveys information and does not directly affect future payoffs. Often, however, signals are directly payoff relevant, a phenomenon that we call signal dependence. For example, if a firm is uncertain about its demand and uses today's sales as a signal of tomorrow's demand, then that signal may also directly affect tomorrow's profit if the good is durable or if consumers form consumption habits. Datta, Mirman and Schlee [9] and Bertocchi and Spagat [4] show that, if the signal is payoff relevant, experimentation may indeed reduce information. Here we show that, despite the inapplicability of Blackwell's Theorem, agents always experiment to increase information if the information structure is noiseless: given the true value of the unknown parameter, the signal realization is deterministic. We then apply our framework to analyze Lazear's [16] model of retail clearance sales, a model with both signal dependence and noiseless information. Received: February 19, 1999; revised version: August 11, 1999     

Lifting the Veil on Reverse Leveraged Buyouts: What Happens During the Private Period?

We document the different types of restructuring activities undertaken during the private period after the reverse leveraged buyout (RLBO) of previously public firms. Preceding the LBO, firm leverage significantly exceeds that of their peers, while their profitability is better than the industry. However, despite their superior performance, these firms are undervalued before going private. While private firms undertake value‐enhancement measures by increasing employee productivity, asset restructuring, decreasing cost of goods sold, and increasing ownership concentration. Enhanced valuation at the RLBO is a result of value capture, as well as efficiencies obtained from restructuring activities. We also identify factors determining the private period duration.     

Unpacking the Antecedents of Crowdfunding Campaign’s Success: The Effects of Social Media and Innovation Orientation

We applied a capabilities view as the theoretical underpinning to investigate the integrative role of orientation (IO) and the strategic use of social media (SSM) on a firm’s crowdfunding campaign success (CFS). We suggest that IO promotes a firm’s ability to succeed with crowdfunding campaigns, and that this relationship is mediated by the SSM. To check our contentions, we surveyed professionals from 322 firms that conducted crowdfunding campaigns. For IO and SSM, we used preexisting scales, while for CFS we created and validated our own seven‐item scale. We found that IO alone does not fully account for CFS, but rather its effect is based on a firm’s ability to SSM. Our findings contribute to the literature on strategic entrepreneurship, media strategy, and public policy.     

Governing new global health-care markets: the case of stem cell treatments

Stem cell innovation has enabled the growth of a global market of treatments for a wide range of diseases but most of this market operates outside the domain of orthodox forms of innovation governance. Much of the analysis of this issue has adopted a supply side perspective informed by the values of the orthodox scientific model of biomedical innovation, arguing that national and transnational regulation has failed to impose appropriate standards on the ‘illicit’ supply of stem cell treatments. In contrast, this paper shows how and why the analysis of global stem cell innovation governance must incorporate the market and health consumer demand into the conceptual framework. Central to the argument is the role of innovation models in mediating the relationship between demand and supply in the global market of new stem cell treatments. Different models of scientific and medical innovation mediate that relationship in different ways and, in jurisdictions where health consumer demand is frustrated, may result in parallel political demands for change in stem cell innovation governance. Such demands are likely to be resisted by the dominant scientific model, producing a further response from health consumers and a continuing dynamic in the political economy of stem cell treatments.     

Non-cognitive child outcomes and universal high quality child care

Exploiting a rich panel data child survey merged with administrative records along with a pseudo-experiment generating variation in the take-up of preschool across municipalities, we provide evidence of the effects on non-cognitive child outcomes of participating in large scale publicly provided universal preschool programs and family day care vis-à-vis home care. We find that, compared to home care, being enrolled in preschool at age three does not lead to significant differences in child outcomes at age seven no matter the gender or the mother's level of education. Family day care, on the other hand, seems to significantly deteriorate outcomes for boys whose mothers have a lower level of education. Finally, longer hours in non-parental care lead to poorer child outcomes.     

Identify Customer Involvement During Organic Food Purchase Through FCB Grid

The study measures the level of customer involvement related to Organic Food (OF) purchase through FCB Grid. A conceptual model was developed to identify the location of OF in FCB Grid by testing the sequencing of Knowledge, Attitude and Purchase Behavior effects. Two scales were adopted from a study by Ghosh et al. (2016 Ghosh, S., Datta, B., &; Barai, P. (2016). Modeling and promoting organic food purchase. Journal of Food Products Marketing, 22, 623–642. doi:10.1080/10454446.2016.1141138[Taylor &; Francis Online], [Web of Science ®] , [Google Scholar]) to measure Knowledge and Attitude pertaining to organic food. Similar such scale with minor moderation was formed for Purchase behavior. 868 responses were analyzed through Structural Equation Model, which indicates that OF falls on the first quadrant of FCB grid and is a high involvement product. This implies Knowledge drives Attitude and Attitude drives Purchase Behavior and demands informative strategy where economic considerations prevail prior to purchase. Organic food production is a sustainable process and positively impacts the livelihood of marginal farmers and will improve the quality of the soil and health of the consumers.     

Production Costs,Scale Economies,and Technical Change in U.S. Textile and Apparel Industries

The elimination of quotas in textiles and apparel poses new threats from import competition. To survive, the sectors need to find least-cost methods of production. The production–cost structure of the U.S. textile and apparel industries is examined using a dual cost framework. A translog cost function is used to measure substitution elasticities between inputs, scale economies, and the nature of technical change. The scope for factor substitution in textiles remains limited with all substitution elasticities being less than unity. Labor and materials are complements in apparel production, but there is evidence of substitution between capital and labor. The rate of technical change is higher in textiles than in apparel. Given the intense import competition from low wage countries, in both industries, technical progress is labor saving. Overall, economies of scale are larger in apparel; however, scale economies have continued to increase in textiles.This research was supported by a grant from the National Textile Center.