Limited attention,share repurchases,and takeover risk

We hypothesize that announcing open market share repurchases (OMRs) to counter negative valuation shocks reveals repurchasing firms’ lost growth opportunities or underperforming assets to potential bidders, making them more likely to become takeover targets. This also leads their investors to face higher takeover risk, a systematic risk associated with economic fundamentals that drive takeover waves, as proposed by Cremers et al. (2009). Indeed, we find that repurchasing firms tend to face higher takeover probability in the first few years following their OMR announcements, and that the increase in takeover risk can largely explain their post-announcement long-run abnormal returns documented in the literature. The increase in takeover risk is larger for smaller firms, firms with poorer pre-announcement stock performance, and those attracting more attention of market participants. Our results suggest that OMRs, which are used by many firms to counter undervaluation, could make the firms more sensitive to takeover waves and raise their cost of equity capital.     

Takeover vulnerability and the credibility of signaling: The case of open-market share repurchases

There is debate in the literature focuses on whether open market repurchases can be taken as a signal of stock undervaluation. This research argues that takeover pressures before a repurchase announcement can be a credible signal of undervaluation. The empirical results indicate that repurchasing firms with a higher probability of takeover experience greater announcement effects, improvements in operating performance and long-run abnormal return, positive forecast revisions by financial analysts, and enhanced agreement between management and shareholders. These findings suggest that takeover probability and open-market share repurchases appear to constitute a double-signal for conveying stock undervaluation to the market.     

External corporate governance and financial fraud: cognitive evaluation theory insights on agency theory prescriptions

R esearch summary : Agency theory suggests that external governance mechanisms (e.g., activist owners, the market for corporate control, securities analysts) can deter managers from acting opportunistically. Using cognitive evaluation theory, we argue that powerful expectations imposed by external governance can impinge on top managers' feelings of autonomy and crowd out their intrinsic motivation, potentially leading to financial fraud. Our findings indicate that external pressure from activist owners, the market for corporate control, and securities analysts increases managers' likelihood of financial fraud. Our study considers external governance from a top manager's perspective and questions one of agency theory's foundational tenets: that external pressure imposed on managers reduces the potential for moral hazard. M anagerial summary : Many of us are familiar with stories about top managers “cooking the books” in one way or another. As a result, companies and regulatory bodies often implement strict controls to try to prevent financial fraud. However, cognitive evaluation theory describes how those external controls could actually have the opposite of their intended effect because they rob managers of their intrinsic motivation for behaving appropriately. We find this to be the case. When top managers face more stringent external control mechanisms, in the form of activist shareholders, the threat of a takeover, or zealous securities analysts, they are actually more likely to engage in financial misbehavior. Copyright © 2016 John Wiley & Sons, Ltd.     

欧盟证券强制要约收购规则及启示

本文以2004年5月20日生效的《欧盟要约收购指令》为基础，对欧盟及其各成员国有关强制要约收购的临界点、强制要约收购的价格以及强制要约收购的豁免制度进行了重点分析，对如何完善我国上市公司强制要约收购制度作了探讨。该指令的研究对完善我国证券法律制度具有重要的现实意义。     

Takeover activity in Australia: endogenous and exogenous influences

The present paper analyses the population of takeover bids for listed Australian companies using quarterly data over a 25-year period to re-examine the predictability of takeover activity and to determine if there is a flow on impact on macroeconomic variables. We examine whether takeover activity: (i) is endogenous; that is, determined by own activity; (ii) is jointly determined by macroeconomic and capital market variables; and (iii) has an exogenous spillover impact across the economy. We find that stock prices and takeover activity share a long-term common trend, the relative success of takeover bids is independent of sharemarket activity, and conclude that aggregate takeover activity is driven by fundamental economic factors rather than by speculative activity.     

日本M&A市场的新趋势

随着经济全球化的深入,世界规模的企业重组和资金流动改变着各个行业中的企业势力范围。从10年前开始。日本企业为了保卫和加强现有的势力范围防止来自国内或国外的威胁开始了一场新的M＆A高潮。这次的N＆A不管在N＆A件数,还是在所涉及的行业、规模、收购金额大小上都有突破,在日本的M＆A历史上留下一页。同时,N＆A收购过程也改变了日本社会对M＆A的认识,也冲击到了日本传统的终身雇佣制。运用M＆A来解决日本社会面临的问题。如人口减少和老龄化的问题也是这次M＆A的新尝试。     

How do valuations impact outcomes of asset sales with heterogeneous bidders?

Differences among bidder type-specific outcomes of asset sales are theoretically related to differences in bidders’ valuations and participation. The lead application to quantify these relations is takeover auctions: bidders are classified into strategic and financial, and bids are available. I structurally estimate valuations from all bids. The positive difference in premiums between strategic and financial acquirers is driven by the difference in dispersions of valuations (e.g., strategic bidders’ synergies are more dispersed) and the set of auction participants. The difference in average valuations is relatively unimportant. My approach can help explain outcomes of asset sales, even in settings with limited bidder data.     

Elections as takeover bids: Some agonistics concerning good government

Agency theory has been widely applied to the governance of business corporations and to good advantage. The formal framework of agency theory pertains as well to polities, wherein citizens are the principals and politicians the agents. Where takeover efforts occur irregularly for corporations, they occur at regular intervals through elections for polities. Timothy Besley’s Principled Agents uses the agency theory to argue that electoral competition will generally select competent and public-spirited politicians. This claim follows from his formal framework, but that framework ignores some questionable and unsettled matters that challenge Besley’s relatively roseate view of the qualitative character of electoral selection.      

The commitment value of takeover defenses

We investigate how takeover defenses can facilitate a firm’s value-increasing stakeholder relationships by bonding its commitment to respect stakeholders’ appropriable quasi-rents in the firm. For this purpose, we develop two variations of the B-index of takeover defenses which are specifically designed to capture the bonding benefit of takeover defenses. We find evidence that some takeover defenses, but not all, provide a bonding benefit in terms of facilitation of a firm’s value-increasing stakeholder relationships. This implies that a firm must selectively adopt the most effective takeover defenses to achieve the desired corporate goals.     

Does takeover competition affect acquisition choices and bidding firm performance? Australian evidence

We examine the influence of takeover competition on three acquisition choices: (i) public versus private target acquisitions; (ii) stock versus cash financed acquisitions; and (iii) related versus unrelated acquisitions. We find strong evidence of acquirers’ preference for public targets, stock swaps and business focus, in the face of takeover competition. Further, we find that the takeover competition has a positive influence on the bid premium paid to acquirer public targets and those financed with stock issues; competitive bids offered to acquire related targets are associated with significantly low bid premiums. In the short-term announcement window, competition-induced bids to acquire public targets and those financed with stock are penalised by the capital market. However, only stock-financed takeovers undertaken in a competitive takeover market show a long-run decline in performance of acquirers.