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We exploit the arrival of industry-wide synergistic merger waves to identify whether classified boards deter takeover bids. In a stylized model, we show that when target classified boards are costly to bidders, their negative effect on takeover likelihood should be more pronounced during merger waves. Using a sample of takeover bids in the United States between 1990 and 2016, we find strong evidence supporting this prediction. The results are robust to accounting for the benefits of classified boards and controlling for other antitakeover provisions. Our findings suggest that classified boards effectively reduce a firm's exposure to the takeover market. [ABSTRACT FROM AUTHOR]

We show that merger announcement returns account for virtually all of the measured size premium. An empirical proxy for ex ante takeover exposure positively and robustly relates to cross-sectional expected returns. The relation between size and expected returns becomes positive or insignificant, rather than negative, conditional on this takeover characteristic. Asset pricing models that include a factor based on the takeover characteristic outperform otherwise similar models that include the conventional size factor. We conclude that the takeover factor should replace the conventional size factor in benchmark asset pricing models. [ABSTRACT FROM AUTHOR]

We examine the role of non-venture private equity (PE) firms as intermediaries in the market for corporate assets. We argue that, in order to create and capture value by acquiring established businesses and selling them to corporate buyers, PE firms must possess at least one of three potential advantages: (a) they must be able to identify businesses that are currently undervalued (valuation advantage), (b) they must be able to enhance the intrinsic value of the business (governance advantage), or (c) they must be able to match the business to a more synergistic corporate owner than is immediately available (timing advantage). We discuss why, and under what conditions, PE firms may thus have an advantage in buying, owning, and selling businesses, and derive a set of propositions predicting which targets PE firms are most likely to pursue. Our study thus offers a comprehensive yet contingent theory of non-venture PE, developing an integrated value-based framework to explain this important and growing phenomenon. In doing so, we also offer new insights into the role of intermediaries in strategic factor markets, especially the market for the buying and selling of businesses. [ABSTRACT FROM AUTHOR]

Fundamental to the accounting literature is that firms' stock prices relate positively to their earnings news. We examine a setting where investors may be unsure to which firm the announced earnings accrue: earnings announced by acquisition targets between the announcement and completion of the acquisition. We find targets' stock prices relate positively to their unexpected earnings during this interim period but only for unsuccessful M&A deals. For completed deals, we fail to find that targets' or acquirers' stock prices respond to targets' unexpected interim earnings at the time of announcement. However, we find that targets' interim earnings predict future returns of the combined firm following deal completion. A trading strategy based on targets' interim earnings produces economically significant annualized abnormal returns of 7.25 percent. Our findings suggest investors respond inefficiently to the earnings that targets announce between the announcement and completion of acquisitions. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M40; M41; G34. [ABSTRACT FROM AUTHOR]

We investigate the effects of target initiation in M&As. We find target-initiated deals are common and that important motives for these deals are target economic weakness, financial constraints, and negative economy-wide shocks. We determine that average takeover premia, target abnormal returns around merger announcements, and deal value to EBITDA multiples are significantly lower in target-initiated deals. This gap is not explained by weak target financial conditions. Adjusting for self-selection, we conclude that target managers' private information is a major driver of lower premia in target-initiated deals. This gap widens as information asymmetry between merger partners rises. [ABSTRACT FROM AUTHOR]

This paper investigates if the equity stake, along with hedge funds, generates value for target companies in highly concentrated markets, such as the Brazilian one. In a sample with 324 Brazilian companies listed in São Paulo Stock Market (B3) that are actively participating in the Anbima Hedge Fund Index (IHFA), between 2007 and 2016, we found that the equity stake of hedge funds generates value in Brazilian invested companies, despite the market being more concentrated. We capture the hedge fund effect on invested companies in terms of: (i) how much the firms' market capitalization is maintained by hedge funds and its percentage change between t and t-1; (ii) how many funds invest in a determined company each period and its percentage change between t and t-1. We defined target firm value creation using two proxies: abnormal return and effective stock return. To derive our results, we performed linear regressions with funds' fixed effects and a set of fund characteristics acting as controls. We found a positive and significant relationship between the equity stake of hedge funds and the value generation in invested companies, despite the Brazilian market being more concentrated. Our results suggest that the hedge fund activism is increasing in Brazil, with fund managers influencing firms' decisions and corporate governance mechanisms. [ABSTRACT FROM AUTHOR]

Many researchers use the G-index or E-index to measure firms' takeover defenses. Others argue that these indices are not related to firms' takeover likelihoods. We find that, unlike their raw values, the instrumented versions of these indices are significantly and negatively related to acquisition likelihood. The difference between the raw and instrumented results indicates that the G-index and E-index include an endogenous component and highlights the importance of accounting for endogeneity in tests that use takeover indices to measure takeover deterrence. We provide data on new instruments that researchers can use to address these issues. [ABSTRACT FROM AUTHOR]

Acquisition is an important activity that enables firms to adapt their resource configurations. Acquisition literature has focused only on the levels of innovation or relational resources, the primary dimensions of organizational resource bases. The authors argue that in addition to the levels, the degree of overlap between the acquiring and target firms, in terms of innovation and relational resources, should influence acquisitions. Furthermore, they argue for the importance of the quality of the target’s resources along with factors influencing the acquirer’s absorptive capacity (e.g., the chief executive officer’s [CEO’s] functional background and the acquiring firm’s marketing intensity and acquisition experience) as contingencies. Using 319 biopharmaceutical acquisitions and a random-effect regression model that accounts for unobserved heterogeneity and the endogeneity of relational and innovation overlap, the authors find that innovation overlap has a positive effect, whereas relational overlap has a negative effect, on acquisition outcomes. Furthermore, the acquirer CEO’s throughput background and acquisition experience negatively moderate, whereas the target’s innovation resource quality and the acquirer’smarketing intensity positivelymoderate, the influence of innovation overlap. The target’s relational resource quality and the acquirer CEO’s throughput background positively moderate the influence of relational overlap. [ABSTRACT FROM AUTHOR]

This paper presents a broad retrospective evaluation of mergers and merger decisions in markets dominated by multisided digital platforms. First, we document almost 300 acquisitions carried out by three major tech companies—Amazon, Facebook, and Google—between 2008 and 2018. We cluster target companies on their area of economic activity providing suggestive evidence on the strategies behind these mergers. Second, we discuss the features of digital markets that create new challenges for competition policy. By using relevant case studies as illustrative examples, we discuss theories of harm that have been used or, alternatively, could have been formulated by authorities in these cases. Finally, we retrospectively examine two important merger cases, Facebook/Instagram and Google/Waze, providing a systematic assessment of the theories of harm considered by the UK competition authorities as well as evidence on the evolution of the market after the transactions were approved. We discuss whether the competition authority performed complete and careful analyses to foresee the competitive consequences of the investigated mergers and whether a more effective merger control regime can be achieved within the current legal framework. [ABSTRACT FROM AUTHOR]

We develop a theory to show how external and internal corporate governance mechanisms affect innovation. We predict a U-shaped relation between innovation and external takeover pressure, which arises from the interaction between expected takeover premia and private benefits of control. Using ex ante and ex post innovation measures, we find strong empirical support for the predicted relation. We exploit the variation in takeover pressure created by the passage of antitakeover laws across different states. Innovation is fostered either by an unhindered market for corporate control or by antitakeover laws that are severe enough to effectively deter takeovers. [ABSTRACT FROM PUBLISHER]

A stock divestment campaign is a common strategy used by social activists to pressure corporations to abandon undesirable practices. However, evidence on the effectiveness of the strategy remains mixed. In this paper, we examine the effectiveness of an international stock boycott by studying a large sample of institutional investor transactions in four emerging market stocks targeted by the Sudan divestment campaign from 2001 to 2012. We find evidence of a negative relationship between the intensity of the campaign and the ownership breadth of the stocks, suggesting the effectiveness of the campaign in encouraging investors to divest from targeted companies. Additional analysis indicates that investors in countries that are sympathetic towards CSR activities are more responsive to the divestment campaign. Further, we find evidence consistent with higher campaign intensity being associated with more depressed stock prices. Finally, when performing qualitative content analyses of the annual reports and CSR reports, we find evidence about the effects of the campaign on the targeted companies' corporate policies and activities in Sudan. In sum, our results support the effectiveness of the stock boycott. [ABSTRACT FROM AUTHOR]

In contrast to previous studies documenting positive abnormal returns to target shareholders, we find that hedge fund activism significantly reduces bondholders' wealth. The average excess bond return is −3.9% around the initial 13D filing, and is an additional −4.5% over the remaining year. Excess bond returns are related inversely to subsequent changes in cash and assets (loss of collateral effects) and directly to changes in total debt. Confrontational campaigns and the acquisition of at least one seat on the target's board elicit more negative bond returns. We also find an expropriation of wealth from the bondholder to the shareholder. [ABSTRACT FROM PUBLISHER]

We present evidence on the benefits of changes in control from mergers and acquisitions We find that the stronger the acquirer's shareholder rights relative to the target's, the higher the synergy created by an acquisition. This result supports the hypothesis that acquisition of firms with poor corporate governance by firms with good corporate governance generate higher total gains. We also find that the synergy effect of corporate governance is shared by target shareholders and acquiring shareholders, in that both target returns and acquire returns increase with the shareholder-rights difference between the acquirer and the target. [ABSTRACT FROM AUTHOR]

This study explores the independent and interactive effects of procedural justice and informational justice on post-deal value creation in large, related acquisitions. Our results show that informational justice and procedural justice affect different components of value creation. Procedural justice is critical in realizing market position improvements following the integration process, while informational justice is essential in achieving market position gains during integration and financial return gains both during and post-integration. Indicating that the interrelationships between different justice dimensions may be more complex than previously thought, we find that procedural justice reduces the positive effects of informational justice on financial return during the integration process, while it magnifies the effects of informational justice on the combined firms' market position during integration efforts. We explore the implications of these results for future research on the acquisition integration process and for practicing managers engaging in large, related acquisitions. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Most existing theories of relationship formation imply that actors form highly cohesive ties that aggregate into homogenous clusters, but actual networks also include many "distant" ties between parties that vary on one or more social dimensions. To explain the formation of distant ties, we propose a theory of relationship formation based on the characteristics of "settings," or the places and times in which actors meet. We posit that organizations form relations with distant partners when they participate in two types of settings: unusually faddish ones and those with limited risks to participants. In an empirical analysis of our thesis in the formation of syndicate relations between U.S. venture capital firms from 1985 to 2007, we find that the probability that geographically and industry distant ties will form between venture capital firms increases with several attributes of the target-company investment setting: (1) the recent popularity of investing in the target firm's industry and home region, (2) the target company's maturity, (3) the size of the investment syndicate, and (4) the density of relationships among the other members of the syndicate. [ABSTRACT FROM AUTHOR]

Several studies argue that paying high acquisition premia is value destroying for acquirer shareholders. There are studies that have even used the size of premium as a measure of low-quality decision making. This paper departs from the earlier research and shows that acquisition premia may be justified when target firms' resources are difficult for the market to value. An analysis of a sample of 458 acquisitions demonstrates that although higher premia are paid for R&D-related assets, the premia do not cause negative abnormal returns. Abnormal returns are more strongly affected by the overall target price levels independent of premia. Copyright © 2007 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

We estimate the impact of bank merger announcements on borrowers' stock prices for publicly traded Norwegian firms. Borrowers of target banks lose about 0.8% in equity value, while borrowers of acquiring banks earn positive abnormal returns, suggesting that borrower welfare is influenced by a strategic focus favoring acquiring borrowers. Bank mergers lead to higher relationship exit rates among borrowers of target banks. Larger merger-induced increases in relationship termination rates are associated with less negative abnormal returns, suggesting that firms with low switching costs switch banks, while similar firms with high switching costs are locked into their current relationship. [ABSTRACT FROM AUTHOR]

We study merger and acquisition (M&A) payment choices of European bidders for publicly and privately held targets in the 1997-2000 period. Europe is an ideal venue for studying the importance of corporate governance in making M&A payment choices, given the large number of closely held firms and the wide range of capital markets, institutional settings, laws, and regulations. The tradeoff between corporate governance concerns and debt financing constraints is found to have a large bearing on the bidder's payment choice. Consistent with earlier evidence, we find that several deal and target characteristics significantly affect the method of payment choice. [ABSTRACT FROM AUTHOR]

Does valuation affect mergers? Data suggest that periods of stock merger activity are correlated with high market valuations. The naïve explanation that overvalued bidders wish to use stock is incomplete because targets should not be eager to accept stock. However, we show that potential market value deviations from fundamental values on both sides of the transaction can rationally lead to a correlation between stock merger activity and market valuation. Merger waves and waves of cash and stock purchases can be rationally driven by periods of over- and undervaluation of the stock market. Thus, valuation fundamentally impacts mergers. [ABSTRACT FROM AUTHOR]

I examine the motivation for, and effect of, including a collar in a merger agreement. The most important cross-sectional determinants of the bid structure (cash vs. stock, and whether to include a collar) are the market-related stock return standard deviations for the bidder and target. This evidence supports the hypothesis that the method of payment is dependent on the sensitivities of the bidder and target to market-related risk because either has the incentive to demand renegotiation of the merger terms if the value of the bidder's offer changes materially relative to the value of the target during the bid period. [ABSTRACT FROM AUTHOR]

This paper provides a comprehensive examination of the disciplinary role of the corporate takeover market using a sample of U.S. target firms over the period 1979 to 1998. The time period spanned allows a broader study not only of the disciplinary role of the takeover market in general, but also of the interaction between the takeover market and alternative governance mechanisms during the 1980s and 1990s. Overall, our evidence is consistent with the view of the corporate takeover market as a "court of last resort," that is, it is an external source of discipline that intercedes when internal control mechanisms are relatively weak or ineffective. [ABSTRACT FROM AUTHOR]

We provide an economic basis for permitting freezeouts of nontendering shareholders following successful takeovers. We describe a specific freezeout mechanism based on easily verifiable information that induces desirable efficiency and welfare properties in models of both corporations with widely dispersed shareholdings and corporations with large pivotal shareholders. The mechanism dominates previous proposals along some important dimensions. We also examine takeover premia that arise in the presence of competition among raiders. Our mechanism is closely related to the practice of takeover law in the United States; thus, our analysis may be thought of as analyzing the economic foundations of current regulations. [ABSTRACT FROM AUTHOR]

We examine the role of three types of stakeholders in the uneven adoption of an organizational practice in different countries, arguing that organizational practices achieve widespread use only when they are consistent with the interests of the most powerful social actors as enshrined in legal rights. Building on a "stakeholder-power" approach to corporate governance, we examine whether the interests of shareholders, workers, and banks are consistent with the practice of hostile takeovers. Regressions using data on as many as 37 countries between 1988 and 1998 lend support to predictions that hostile takeovers increase in frequency with the extent to which shareholder rights are protected and decrease with the degree to which workers' and banks' rights are protected. We discuss the implications for the analysis of comparative institutions and for organizational theory. [ABSTRACT FROM AUTHOR]

We develop an arbitrage-free and complete framework to price options on the stocks of firms involved in a merger or acquisition deal allowing for the possibility that the deal might be called off at an intermediate time, creating discontinuous impacts on the stock prices. Our model can be a normative tool for market makers to quote prices for options on stocks involved in such deals and also for traders to control risks associated with such deals using traded options. The results of tests indicate that the model performs significantly better than the Black–Scholes model in explaining observed option prices. [ABSTRACT FROM AUTHOR]

How do shareholders perceive managers who lever up under a takeover threat? Increasing leverage conveys good news if it reflects management's ability to enhance value. It conveys bad news, though, if inefficient managers are more pressured to lever up than the efficient ones. This paper demonstrates that negative updating may prevail. Managers who lever up to end a takeover threat may thus commit to enhance value and yet increase their chances of being replaced by their shareholders. The model provides implications for the dispersion of intraindustry leverage and for the stock price reaction to debt-for-equity exchanges. [ABSTRACT FROM AUTHOR]

We study shareholder returns for firms that acquired five or more public, private, and/or subsidiary targets within a short time period. Since the same bidder chooses different types of targets and methods of payment, any variation in returns must be due to the characteristics of the target and the bid. Results indicate bidder shareholders gain when buying a private firm or subsidiary but lose when purchasing a public firm. Further, the return is greater the larger the target and if the bidder offers stock. These results are consistent with a liquidity discount, and tax and control effects in this market. [ABSTRACT FROM AUTHOR]

We analyze several hundred firms that expand via acquisition and/or increase their number of business segments. The combined market reaction to acquisition announcements is positive but acquiring firm excess values decline after the diversifying event. Much of the excess value reduction occurs because our sample firms acquire already discounted business units, and not because diversifying destroys value. This implies that the standard assumption that conglomerate divisions can be benchmarked to typical stand-alone firms should be carefully reconsidered. We also show that excess value does not decline when firms increase their number of business segments because of pure reporting changes. [ABSTRACT FROM AUTHOR]

This study adds to current explanations of executive fate following a merger or acquisition by examining how executives' perceptions of merger events determine whether they stay or leave. Results indicate that executives' perceptions of the merger announcement, interactions with the acquiring firm's top managers following the merger, and long-term effects of the merger significantly influenced their decision to stay or leave. These perceptions could be used to correctly distinguish between stayers and leavers in almost 80 percent of the cases. In addition, perceptions created when the target company was acquired by a foreign multinational made it more likely that the executive would leave. This finding demonstrates that foreignness continues to be an important determinant of executive perceptions in cross-national mergers and acquisitions. [ABSTRACT FROM AUTHOR]

The presents a composite sketch of a future Japanese takeover battle which portrays a Japanese market for corporate control. The author believes that future Japanese markets will feature global players and Western tactics, but will retain distinctly Japanese outcomes. He also feels that future Japanese merger and acquisition activity will differ in the roles played by both foreign and domestic bidders. Unlike current U.S. activity, these bidders will begin and end their roles only as agents of change, and rarely ever become victors in open, competitive bidding for the target company. The comparative absence of an active market for corporate control in Japan is attributed to the locking up of shares, self-serving entrenchment of management, and government prohibition.

The evidence that takeovers do not benefit shareholders of acquiring firms is substantial. One explanation for the existence of negative returns can be traced to the agency relationship between acquiring firm managers and their shareholders. Since much managerial remuneration is tied to firm size, corporate acquisition is one method by which management can gain from exploiting this relationship. Negative returns (on average) to acquiring firm shareholders also open the possibility that aggregate returns (target plus acquirer returns) from the takeover process may be zero or even negative. This would contradict the widely held belief that takeovers are wealth creating. A compilation of historical data on returns to acquiring firm shareholders and manager remuneration support this hypothesis. Finally, additional regulation in the market for corporate control is not the appropriate policy response to takeover abuses. Rather, the solution lies in making corporate boards of directors more responsive to the concerns of their shareholders. [ABSTRACT FROM AUTHOR]

This paper focuses on the impact that reputation has on the decision to proceed with a strategic alliance. Employing reputation constructs adapted from the Fortune Corporate Reputation Survey, we manipulated a target firm's reputation in an experimental design. The subjects were placed in the role of CEO of the partner firm and asked whether they would engage in the alliance. Findings indicate that (1) reputation is a multidimensional construct, (2) the personal information-processing characteristics of the decision-maker mediate the reputation effect and may suppress the reputation information, (3) subjects may compensate weaker elements of reputation for stronger ones when making decisions, (4) product and management reputation are the most important factors, and (5) reputation is a factor affecting the decision regardless of whether the proposed target is a supplier or a competitor. [ABSTRACT FROM AUTHOR]

This research investigates the effects of merger and acquisition negotiations on subsequent target company top management turnover. Three attributes of the companies and seven attributes of the merger and acquisition transactions are examined. The results indicate that the primary impact of negotiations is evident in the fourth year after a settlement date. When a buyer approaches an unrelated company that has been subject to previous takeover interest with a merger proposal, and an agreement is reached, the target's management team is likely to experience abnormally high turnover 4 years later. Additional research ideas are suggested to help explain the sizeable turnover rates in the 3 years immediately following a merger or acquisition. [ABSTRACT FROM AUTHOR]

This paper critically examines five rules for making successful acquisitions advocated by Peter Trucker. In an attempt to verify the rules, supporting and non-supporting empirical evidence, opinions and arguments are reviewed. The analysis suggests that the rules are not conclusively supported by current evidence or argument. Adopting these rules does not ensure successful acquisitions and may needlessly limit managers' opportunities for successful acquisitions. [ABSTRACT FROM AUTHOR]

This paper describes how takeovers are accomplished and why they are not readily accommodated by existing organizational theories. We examined the factors that made organizations vulnerable to takeovers during the 1980s, using event-history techniques on time-series data covering all takeover bids for Fortune 500 firms between January 1980 and December 1990. The paper shows that greater organizational slack, age, and having a finance chief executive officer increased the risk of takeover; family control and financial characteristics such as a higher market-to-book ratio lowered the risk; while bank control and intercorporate network ties had no discernable effect. The results indicate an irony: Large corporations that were most successful by the standards of organization theory were most likely to be taken over in the 1980s. We argue that theory about organizations and environments has been premised on an assumption of managerialism that is no longer tenable and that it must adjust to the financial model of the corporation that now dominates economic and policy discourse. [ABSTRACT FROM AUTHOR]

This study examined the influence of chief executive officers' (CEO) incentives and individual characteristics on the likelihood that target firms will resist takeover attempts. Results showed that the greater the level of CEO stock ownership, the lower the likelihood of takeover resistance; however, neither the existence nor the magnitude of a CEO's "golden parachute" payment affected takeover resistance. Although CEO age had a curvilinear relationship with the likelihood of takeover resistance, CEO tenure was insignificant. [ABSTRACT FROM AUTHOR]

This study investigates how acquiring and target firm managers' preferences for control rights motivate the payment for corporate acquisitions. We expect that managers of target firms who value influence in combined firms will prefer to receive stock. One reason top managers desire influence is to enhance their chances of retaining jobs in the combined firm. Our analysis shows a strong, positive association between managerial ownership of target firms and the likelihood of acquisitions for stock. We also find that managers of target firms are more likely to retain jobs in combined firms when they receive stock rather than cash. [ABSTRACT FROM AUTHOR]

We examine bidder returns at the announcement of a takeover proposal when the target firm is privately held. In stock offers, bidders experience a positive abnormal return, which contrasts with the negative abnormal return typically found for bidders acquiring a publicly traded target. On the other hand, bidders experience no abnormal return in cash offers. Our analysis suggests that the positive wealth effect is related to monitoring activities by target shareholders and, to an extent, reduced information asymmetries. [ABSTRACT FROM AUTHOR]

This article examines the impact of a takeover bid on the careers and compensation of chief executives of target firms. We find that acquisition attempts occur more frequently in industries where chief executive officers (CEO) have positive abnormal compensation. Target CEOs are more likely to be replaced when a bid succeeds, than when it fails. CEOs of target firms who lose their jobs generally fail to find another senior executive position in any public corporation within three years after the bid. Consistent with Fama's (1980) notion of "ex post settling up", postbid compensation changes of managers retained after an acquisition attempt are negatively related to several measures of their prebid abnormal compensation. This result is robust to a variety of specifications and does not seem to be caused by mean reversion or selection bias. These findings are consistent with the hypothesis that a takeover bid generates additional information that is used by labor markets to discipline managers. [ABSTRACT FROM AUTHOR]

We analyze how ownership concentration affects firm value and control of public companies by examining effects of deaths of inside blockholders. We find shareholder wealth increases, ownership concentration falls, and extensive corporate control activity ensues. Share price responses are related to the deceased's equity stake. Control group holdings fall for two-thirds of the firms due to either the estate's dispersal or inheritors selling stock. A majority of firms become targets of control bids: three-quarters of bids are successful; one-third are hostile. Our evidence is broadly consistent with Stulz's (1988) model of the relationship between ownership concentration and firm value. [ABSTRACT FROM AUTHOR]

This paper examines the hypothesis that an important role of corporate takeovers is to discipline the top managers of poorly performing target firms. We document that the turnover rate for the top manager of target firms in tender offer-takeovers significantly increases following completion of the takeover and that prior to the takeover these firms were significantly under-performing other firms in their industry as well as other target firms which had no post-takeover change in the top executive. We interpret the results to indicate that the takeover market plays an important role in controlling the nonvalue maximizing behavior of top corporate managers. [ABSTRACT FROM AUTHOR]

This paper shows that target shareholders can be made better off through the use of certain types of defensive strategies that reduce the value of the target by different amounts for different bidders. In many cases, simply the threat of such strategies can make target shareholders better off. Therefore, empirical tests based on stock price reactions at the adoption of defensive strategies may be underestimating the effect of such strategies. The paper also identifies the necessary characteristics that make these strategies effective and shows that many observed defenses possess similar properties. [ABSTRACT FROM AUTHOR]

The model of target resistance to tender offers developed here is based on the private information of target management about the true value of the firm and about its own preference for control. Target management may reject an offer for any of three reasons in the context of this model. First, the offer may be inadequate compared to the true value of the target. Second, the offer may be adequate in this sense, but target management may prefer to await a possibly higher offer in the next period. Third, target management may reject an offer in order to maintain its control over the target. As offers are made and rejected, however, some targets develop a reputation for having a preference for control and their market value falls. This theory thus provides one explanation of the findings that information is revealed at the outcome date and that the market values of targets of unsuccessful tender offers separate as indicated in the studies of Sokol and Bradley, Desai, and Kim. The possibility of a preference for control reduces the initial market value of the firm below what it would be if there were no such possibility. A passivity rule can eliminate both the effect of a preference for control and the externalities present in a value-maximizing resistance strategy. Furthermore, a passivity rule results in the first-best market value. The model considered here suffers from three principal weaknesses that need to be dealt with to clarify the resistance issue. First, resistance undertaken to cause delay in order to provide adequate time to allow bidding competition to develop needs to be incorporated into the analysis. Second, the development of information about and the search for attractive targets should be endogenized. Third, the assumption of symmetrically informed investors should be relaxed. [ABSTRACT FROM AUTHOR]

This article evaluates the valuation consequences of cash tender offers. The authors hope to clarify the efficacy of legislation requiring the complete disclosure of intended tender offers by examining the stock returns of target companies prior to announced tender offers. The tender offers are consider according to their success or failure and level of resistance of the management of the target company. The authors also investigate the returns experience by bidding companies prior to and after tender offer announcements.

Korea’s domestic emissions trading scheme commenced in January 2015. It targeted mainly industrial and power sectors, and compelled companies to transform how they manage energy efficiency and mitigate GHGs. This study sets out to explore how Korean companies evaluated their allocation position and engaged in emissions trading in the first compliance period, and to identify their views on trading barriers and policy expectations at the start of emissions trading. Questionnaire surveys and on-site interviews targeting Korean companies under the Korean emissions trading scheme were conducted at the start of operations (February to March 2015) and after the first compliance year (May 2016), respectively. Actual operation results are observed and compared with the survey findings. This study extrapolates implications for policy and presents suggestions for the government and the target companies in terms of how to improve the current emissions trading scheme in order to further stimulate emissions trading. POLICY RELEVANCE This study attempts to bridge the gap between companies and government policy in operating the domestic emission trading scheme in Korea. Empirical results, based on analysis of company-level data, reveal how businesses perceive K-ETS and how this relates to the operating results, which saw only limited trading of surplus emissions taking place in the early phase. Key barriers to active trading identified in the study include supply-demand imbalance, policy uncertainty and lack of preparedness of companies over carbon pricing. These barriers could be addressed by improved transparency of allowance allocation methods, possibly restricting carry-over of surplus allowances, ending policy uncertainty and providing more information to companies that can support companies’ policy understanding of the carbon pricing based on the market mechanism. Targeted companies should proactively participate in emissions trading in the early phase, in order to learn from it and prepare for the future introduction of auctioning. [ABSTRACT FROM AUTHOR]

What are the types of interactions in the discursive struggles between the two parties involved in a hostile takeover bid? How is the legitimacy of the bid (de)constructed by both the bidding and target companies during their discursive struggles? This paper aims at addressing these research questions. Discursive struggles between the bidding and target companies are studied in a sample of 66 press releases related to seven hostile takeover bids approved by the French Market Regulator between December 2006 and December 2014. A study of the sequence followed by each party in issuing their press releases confirms the existence of strong interactions in all the hostile takeover bids studied. Using a manual content analysis methodology, we find that the disclosures made by the bidding and target companies consist of a series of attacks and defenses in which target companies are particularly offensive. We also give evidence that the two companies use legitimation, (de)legitimation and (re)legitimation arguments during discursive struggles, revealing the reciprocity of the communication between the two protagonists. We underline the symbolic or strategic dimensions of these legitimacy strategies in the view of the outcome of bids. Finally, we discuss the implications of our findings for regulators and make suggestions for future research. Based on the metaphor of ventriloquism, our research highlights the importance of considering disclosures as a dynamic and mutual influence process. [ABSTRACT FROM AUTHOR]