Until recently, international mergers of companies have been seen as purely financial ventures without any concern for what they meant for the people involved. However, attitudes are gradually ...changing. This study of a successful Israeli high-tech company's merger with an American competitor offers an important contribution to a better understanding of the social and personal ramifications of mergers. Based upon in-depth fieldwork, the book explores the reality behind the statistics, balance sheets, and managerial prescriptions that are the focus of most studies of international mergers and acquisitions. Offering a richly detailed description of everyday work life, the author reveals the dramas of identity that unfold as a consequence of the company's attempts to redefine the boundaries of the organizational collective by adding to it people from another country. The book debunks many myths used to support arguments both for and against globalization and offers instead an in-depth depiction and a grounded assessment of its everyday realities.
What drives merger waves? Harford, Jarrad
Journal of financial economics,
09/2005, Volume:
77, Issue:
3
Journal Article
Peer reviewed
Aggregate merger waves could be due to market timing or to clustering of industry shocks for which mergers facilitate change to the new environment. This study finds that economic, regulatory and ...technological shocks drive industry merger waves. Whether the shock leads to a wave of mergers, however, depends on whether there is sufficient overall capital liquidity. This macro-level liquidity component causes industry merger waves to cluster in time even if industry shocks do not. Market-timing variables have little explanatory power relative to an economic model including this liquidity component. The contemporaneous peak in divisional acquisitions for cash also suggests an economic motivation for the merger activity.
Private and Public Merger Waves MAKSIMOVIC, VOJISLAV; PHILLIPS, GORDON; YANG, LIU
The Journal of finance (New York),
October 2013, Volume:
68, Issue:
5
Journal Article
Peer reviewed
We document that public firms participate more than private firms as buyers and sellers of assets in merger waves and their participation is affected more by credit spreads and aggregate market ...valuation. Public firm acquisitions realize higher gains in productivity, particularly for on-the-wave acquisitions and when the acquirer's stock is liquid and highly valued. Our results are not driven solely by public firms' better access to capital. Using productivity data from early in the firm's life, we find that better private firms subsequently select to become public. Initial size and productivity predict asset purchases and sales 10 and more years later.
This paper investigates the effects of analyst recommendations issued after a merger announcement on deal completion. We find the probability of completion increases (decreases) with the favorability ...of acquirer (target) recommendations. Results from instrumental variables tests support causality running from recommendations to merger outcomes. Additional tests suggest that these relations are driven by target shareholders reassessing the merger offer in response to movements in acquirer and target valuations. We also find that favorably recommended firms in a proposed merger underperform following deal resolution, suggesting that investors overreact to postmerger announcement recommendations.
This paper was accepted by Wei Jiang, finance
.
Can Analysts Analyze Mergers? Tehranian, Hassan; Zhao, Mengxing; Zhu, Julie L.
Management science,
04/2014, Volume:
60, Issue:
4
Journal Article
Peer reviewed
After the completion of a merger and acquisition (M&A) transaction, the target firm is delisted, but some analysts who covered it retain coverage of the merged firm. We hypothesize that this decision ...is based on two factors: the analyst's ability to cover the merged firm and his or her assessment of the M&A deal. Consistent with these hypotheses, we find that the remaining target analysts provide more accurate earnings forecasts and more optimistic stock recommendations and growth forecasts for the merged firms than do the remaining acquirer analysts. We also find that a higher percentage of target analysts choosing to cover the merged firm is associated with better operating and long-term stock performance of that firm, but we do not find this relation with acquirer analysts. Our results extend the literature by showing that target analysts' coverage decisions reveal valuable information about a merged firm's future performance.
This paper was accepted by Wei Jiang, finance.
Acquiring-firm shareholders lost 12 cents around acquisition announcements per dollar spent on acquisitions for a total loss of $240 billion from 1998 through 2001, whereas they lost $7 billion in ...all of the 1980s, or 1.6 cents per dollar spent. The 1998 to 2001 aggregate dollar loss of acquiring-firm shareholders is so large because of a small number of acquisitions with negative synergy gains by firms with extremely high valuations. Without these acquisitions, the wealth of acquiring-firm shareholders would have increased. Firms that make these acquisitions with large dollar losses perform poorly afterward.
The binary neutron-star merger GW170817
was accompanied by radiation across the electromagnetic spectrum
and localized
to the galaxy NGC 4993 at a distance
of about 41 megaparsecs from Earth. The ...radio and X-ray afterglows of GW170817 exhibited delayed onset
, a gradual increase
in the emission with time (proportional to t
) to a peak about 150 days after the merger event
, followed by a relatively rapid decline
. So far, various models have been proposed to explain the afterglow emission, including a choked-jet cocoon
and a successful-jet cocoon
(also called a structured jet). However, the observational data have remained inconclusive
as to whether GW170817 launched a successful relativistic jet. Here we report radio observations using very long-baseline interferometry. We find that the compact radio source associated with GW170817 exhibits superluminal apparent motion between 75 days and 230 days after the merger event. This measurement breaks the degeneracy between the choked- and successful-jet cocoon models and indicates that, although the early-time radio emission was powered by a wide-angle outflow
(a cocoon), the late-time emission was most probably dominated by an energetic and narrowly collimated jet (with an opening angle of less than five degrees) and observed from a viewing angle of about 20 degrees. The imaging of a collimated relativistic outflow emerging from GW170817 adds substantial weight to the evidence linking binary neutron-star mergers and short γ-ray bursts.
Using a large sample of mergers in the US, we examine whether corporate social responsibility (CSR) creates value for acquiring firms' shareholders. We find that compared with low CSR acquirers, high ...CSR acquirers realize higher merger announcement returns, higher announcement returns on the value-weighted portfolio of the acquirer and the target, and larger increases in post-merger long-term operating performance. They also realize positive long-term stock returns, suggesting that the market does not fully value the benefits of CSR immediately. In addition, we find that mergers by high CSR acquirers take less time to complete and are less likely to fail than mergers by low CSR acquirers. These results suggest that acquirers' social performance is an important determinant of merger performance and the probability of its completion, and they support the stakeholder value maximization view of stakeholder theory.
Proponents of hospital consolidation claim that mergers lead to significant cost savings, but there is little systematic evidence backing these claims. For a large sample of hospital mergers between ...2000 and 2010, I estimate difference-in-differences models that compare cost trends at acquired hospitals to cost trends at hospitals whose ownership did not change. I find evidence of economically and statistically significant cost reductions at acquired hospitals. On average, acquired hospitals realize cost savings between 4 and 7 percent in the years following the acquisition. These results are robust to a variety of different control strategies, and do not appear to be easily explained by post-merger changes in service and/or patient mix. I then explore several extensions of the results to examine (a) whether the acquiring hospital/system realizes cost savings post-merger and (b) if cost savings depend on the size of the acquirer and/or the geographic overlap of the merging hospitals.
We examine how search frictions affect merger outcomes. Exploiting firm connections in common bank networks (CBNs) as a channel for reducing search costs, we show that like-buys-like mergers are more ...probable between firms connected through a CBN. This effect is amplified if the connection has been recently formed or the network contains many plausible choices for merger partners. CBN-facilitated mergers exhibit higher synergy and lower post-merger cost of debt. We confirm that CBNs reduce search costs even after alternative explanations are considered. These findings highlight the importance of search in the process of redrawing firm boundaries.
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