Mental health: Shifting the balance of care

For the first time, Departments have been forced to go public on their medium‐term spending forecasts. As one might expect, a good deal of smoke has been made. PUBLIC MONEY invites its readers to penetrate the smokescreen and pick the high and low spenders of the next ten years.     

Value creation and the probability of success in merger and acquisition transactions

This paper presents and tests a hypothesis that expands existing explanations of value creation in merger and acquisition (M&A) transactions. The main premise is that value creation is determined by not only the target’s pre-acquisition value, as indicated by numerous studies in extant literature, but also by the acquirer’s competency (among other factors) demonstrated by their pre-merger financial ratios. The paper shows that M&A transactions create value in the longer-run and the gain is commensurate with the acquirer’s historical performance and the target’s pre-acquisition value. Further, the paper employs statistical procedures and model-building techniques in order to develop and validate parsimonious Altman-style predictive models. The models reasonably identify successful M&A deals and are statistically significant and consistent with a few existing theories. Specifically, the evidence on liquidity supports internal capital markets hypothesis but does not support the theories of agency problems, while the evidence on financial leverage supports the view that lower debt enhances corporate control.     

Toward a complete definition of relatedness in merger and acquisition transactions

The interrelation between different sources of relatedness in M&A transactions has been largely overlooked in extant literature. This paper offers theoretical and empirical investigation and introduces a few new measures of relatedness. We find that single-dimensional measures of relatedness are complements, not substitutes, of each other, and their impacts on the market’s reaction are additive and interdependent. Specifically, each measure contains unique relatedness information and the market’s perception of, and reaction to, the presence of relatedness in M&A deals is more sophisticated than the extant literature prescribes. The market seems to reward operational and marketing relatedness in small-vicinity mergers and out-of-state mergers. In contrast, related in-state mergers seem to be associated with a significantly negative market reaction. Similarly, technology affiliation induces an additional positive market reaction that is separate from simple industry matching, and the market seems to reward the acquisition of high-technology targets by high-technology acquirers and to penalize the acquisition of high-technology targets by non-high-technology acquirers. Furthermore, we find that horizontally and vertically related mergers are relatively more likely to be completed, while in-state and large-vicinity mergers are less likely to be completed. We also find that when the target is incorporated in a target-friendly state, the merger is less likely to be completed, though state-specific merger laws do not contribute significantly to mergers’ valuation. Taken together, our results indicate that relatedness is a multidimensional metric composed of several interrelated components, and, thus, single-dimensional proxies are not sufficient to capture relatedness accurately and completely.

     

From Economics to Political Economy: Contradictions,Challenge, and Change

The nature of the challenge to mainstream economics needs to be carefully considered. This article presents an overview of the challenge, emphasizing that it is not just a matter of heterodox economists developing non‐neoclassical economic theories. The embrace of a pluralist method and pedagogy is equally significant. The development of a transdisciplinary approach adds further to the breadth of the challenge. Weaving these elements together as political economy provides an alternative paradigm to mainstream economics. Extending its influence requires focus on adult education, the media, and public policy, as well as sustained efforts within universities.