The Risk Effects of Acquiring Distressed Firms

Existing research shows that bidder default risk increases following acquisitions due to a rise in post‐acquisition leverage and managerial risk‐taking actions offsetting the potential for asset diversification. This study examines whether the risk effects of acquiring distressed targets are fundamentally different and investigates possible explanations for any dissimilarities. Bidders often acquire relatively smaller distressed targets in domestic and related industries and have a higher initial target stake and more financial flexibility, thereby minimizing risk exposure. Controlling for several characteristics of bidder investment behaviour in both types of deals, however, we find that the increase in bidder default risk is substantially larger when acquiring distressed firms.     

Rural to urban land conversion in China — How large is the over-conversion and what are its welfare implications?

The current system of converting farmland to urban land use in China can be characterized as a hybrid system that combines government controls with market-based transfers. In this paper we argue that this hybrid governance structure causes an over-conversion of farmland from the rural to the urban sector, as compared to a competitive market situation, and a welfare reallocation that discriminates against farmland owners. We develop a partial equilibrium model that can be used to examine the impact of the current hybrid governance structure on the over-conversion of farmland and to analyze the welfare changes for different groups of actors and the resulting net social welfare loss. Using a dataset with detailed information on farmland acquisitions and urban land transactions in Yingtan City in Jiangxi Province, we illustrate how this framework can be applied. Our results indicate an over-conversion of 33.5% of the total converted farmland in this city between 1999 and 2003. The welfare of farmland owners affected by the conversion decreased by 1.38 billion RMB, while the net social welfare loss equaled more than 270 million RMB during the same period. The local government obtained 380 million RMB of revenues by re-selling farmland as urban land through competitive conveyance mechanisms between 2002 and 2005, while the manufacturing sector gained an estimated 280 million RMB from buying land use rights at relatively low prices. We conclude that the current policy of increasing urban land conveyance through competitive mechanisms does not address two major underlying causes of over-conversion, and that protection of farmland would be better served by replacing the current hybrid rural to urban land market structure by a competitive land market.     

Transferring game attitudes to the brand: persuasion from age 6 to 14

ABSTRACT

This paper aims to replicate previous findings regarding the differential impact of TV advertising and advergames on children's brand attitudes and pester intentions. Using a large data-set (N = 940, M_age = 9.8, SD = 2.4), with children ranging between 6 and 14 years old, the influence of passive exposure to TV advertising is compared to active exposure to an advergame. In addition, the potential moderating effect of age is explored. In a between-participants experiment, Flemish children were randomly assigned to watch a TV ad, play an advergame, or a no marketing control condition. Results revealed that children who had played the advergame reported significantly more positive brand attitudes compared to children who had watched the TV ad and children in the no advertising exposure control group. Children's pester intent was significantly higher for the advergame compared to the TV ad, but not compared to the no advertising exposure control group. The findings further showed that children's attitudes towards the ad format mediate the impact of the advertising format on pester intent. The advergame was indirectly more persuasive than the TV ad since children reported more positive attitudes towards the advergame compared to the TV advertisement. Moreover, this mediation effect did not differ by children's age. Persuasion knowledge did not mediate the influence of the advertising format on pester intent since children's persuasion knowledge was not significantly related to pester intentions regardless of children's age.