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Cross-border M&As are important corporate decisions. They are different from domestic M&As in that acquirers have potentially more investment opportunities, but also greater challenges. This thesis provides new evidence on why acquirers undertake cross-border deals, and how they manage the additional challenges that arise in cross-border deals.The thesis first examines the role of country-level innovation in driving the decision to make cross-border instead of domestic M&As. Country-level and country-pair-level evidence shows that acquirers in low-innovation countries are more likely to do a cross-border deal, and are more likely to acquire a target in a relatively higher-innovation country. Deal-level evidence suggests that higher-innovation acquirers in low-innovation countries are more likely to undertake cross-border deals, and earn higher returns from cross-border deals than from domestic deals. Further, acquirers in low-innovation countries typically target relatively higher-innovation targets in cross-border deals than in domestic, holding other factors constant.The thesis then investigates the choice of payment method in cross-border M&As as a mechanism to manage the additional risks when compared to domestic deals. It shows that an all cash option is the preferred payment method for all M&A deals, but that its use in cross-border deals is significantly more likely than in domestic. Further, it finds an increase in the use of stock in cross-border deals involving higher relative risk target countries. For more recent periods, the use of stock (cash) has increased (decreased) significantly in cross-border deals, resulting in the close convergence with payment method used in domestic deals. Further analysis shows that the relative risk of cross-border deals has increased for bidders in more recent periods, suggesting that bidders during this period targeted higher-risk countries. The observed increased use of stock in more recent cross-border deals is consiste

This thesis examines the drivers of value-creation and value-destruction in venture capital (VC) and private equity (PE) funds. VC/PE funds have become an increasingly important financial intermediary. They are a key source of capital for young companies who might otherwise have difficulty raising funds from stock-markets or from lenders. VC/PE funds can also help larger companies to restructure and re-direct operations. However, not all VC/PE funds earn super-normal returns or succeed in fostering innovation and value-creation. Subsequently, this thesis examines the drivers of value-creation in VC/PE funds. This thesis highlights the skewness that is present in VC/PE funds’ returns. The thesis then examines the role of fund-level characteristics in determining VC/PE performance. The thesis focuses on the role of a fund’s size and diversification. The thesis also examines typical incentive contracts between VC/PE funds and their investors, and shows that the traditional incentive schemes can lead to sub-optimal performance. The thesis then uses this background to examine the structure of Australia’s Innovation Investment Fund scheme, which is designed to support VC funds’ in their investments in start-up companies. The main contributions of this thesis are to highlight the drivers of VC/PE fund performance and to propose ways to incentivize and select value-creating funds.

We examine three aspects of investors’ divergence of opinion in the context of takeovers.First we examine the effect of divergence of opinion and short sale constraints on merger announcement returns. To our knowledge, no study has analysed this combined effect for acquirers and targets. Using a sample of 565 Australian acquirers and 442 targets we find that relative spread and order imbalance (proxies for divergence of opinion), significantly affect acquirer returns. This provides information to investors wanting to assess the impact on bidder returns of an impending merger. The evidence of an impact on target returns is weak. Neither of our proxies for short sale constraints (level of institutional ownership or short selling ban), present a significant relationship with acquirer returns. The relationship with target returns is very weak. Second, we examine the effect of the market reaction to a takeover announcement in conjunction with divergence of opinion on deal success. To our knowledge, no study has analysed this joint effect. We apply logistic regressions using a sample of 774 Australian acquirers and 584 targets and find some evidence that managers in takeover negotiations listen to the acquirer market reaction to the announcement when deciding whether to complete a deal or withdraw from it. We do not find evidence of managers listening to the target market reaction. Additionally, we find that deal success has a significant positive relationship with relative spread and a significant negative relationship with order imbalance, variables which proxy for divergence of opinion.Third, we examine the impact of divergence of opinion on merger arbitrage investment strategies. To our knowledge, no study has analysed this mpact. We find that by using divergence of opinion to predict takeover success, we can build a merger arbitrage portfolio that earns higher Fama and French (1993) adjusted excess returns than a typical portfolio where arbitrageurs invest in al

All venture capital investments exhibit some form of asymmetric information. The seminal paper on the structure of venture investments, Kaplan and Stromberg (2004), investigates how venture capitalists use deal construction to control agency conflicts within funded deals and their associated internal, external and execution risks. Another key strand of the academic literature has reviewed the contractual arrangements venture capital firms reach, the process of venture capital selection and determinants of their success from a post-investment perspective (Fried and Hisrich (1994), Manigart, Vermeir and Sapienza (1996), Gompers and Lerner (2004), Wright and Robbie (1998)). This thesis also explores venture capital investment, albeit from a pre-investment standpoint. In contrast to Kaplan and Stromberg’s (2004) demonstration of the use of venture capital mechanisms to control agency issues, this research addresses how agency issues influence the final selection of potential investments by venture capitalists.Kaplan and Stromberg (2004) use post-funding metrics to capture risks, which influence post-contract design. From a pre-funding perspective, internal, external and execution risks are subjective, rare and difficult to measure. Nevertheless, this thesis uses pre-funding proxies to replicate these risks, some of which have direct empirical academic support. Information for sixty-two deals, thirty-four funded and twenty-eight unfunded, was hand collected through a combination of surveys, interviews and consultation with five of Australia’s leading venture capital firms, and individuals from the Australian Private Equity and Venture Capital Association (AVCAL) board and executive.The key results indicate that once past initial screening stages, investment proposals that have a higher likelihood of receiving venture investment are those that had prior government investment, and/or, where the entrepreneur has proposed the investment be through milestone tranche