This research examines the relationship between policy uncertainty and mergers and acquisitions (M&As). We find that policy uncertainty is negatively related to firm acquisitiveness and positively ...related to the time it takes to complete M&A deals. In addition, policy uncertainty motivates acquirers to use stock for payment and to pay lower bid premiums. Acquirers, on average, create larger shareholder value from M&A deals undertaken during periods of high policy uncertainty, which is attributable to their prudence as well as the wealth transfer from the financially constrained targets to acquirers.
We challenge the common practice of estimating gravity equations with interval or averaged data in order to capture dynamic‐adjustment effects to trade‐policy changes. Instead, we point to a series ...of advantages of using consecutive‐year data recognizing dynamic‐adjustment effects. Our analysis reveals that, relative to interval or averaged data, the use of consecutive‐year data avoids downward‐biased effect estimates due to the distribution of trade‐policy events during an event window as well as due to anticipation (pre‐interval) and delayed (post‐interval) effects, and it improves the efficiency of effect estimates due to the use of more data.
Competition and Bank Opacity Jiang, Liangliang; Levine, Ross; Lin, Chen
Review of financial studies/The Review of financial studies,
07/2016, Letnik:
29, Številka:
7
Journal Article
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Did regulatory reforms that lowered barriers to competition increase or decrease the quality of information that banks disclose to the public? By integrating the gravity model of investment with the ...state-specific process of bank deregulation that occurred in the United States from the 1980s through the 1990s, we develop a bank-specific, time-varying measure of deregulation-induced competition. We find that an intensification of competition reduced abnormal accruals of loan loss provisions and the frequency with which banks restate financial statements. The results suggest that competition reduces bank opacity, potentially enhancing the ability of markets to monitor banks.
Abstract
We quantify the impact of country-specific institutions on international trade and development in a structural gravity framework. The econometric analysis offers robust evidence that ...stronger institutions promote trade. A counterfactual analysis reveals that the changes in institutional quality in the poor countries in our sample between 1996 and 2006 have had, via their impact on imports from rich countries, significant and heterogeneous welfare effects, varying between −2% and 5%. Our approach is readily applicable to identifying the impact of any country-specific variable on international trade in the structural gravity framework.
Disasters Implied by Equity Index Options BACKUS, DAVID; CHERNOV, MIKHAIL; MARTIN, IAN
The Journal of finance (New York),
December 2011, Letnik:
66, Številka:
6
Journal Article
Recenzirano
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We use equity index options to quantify the distribution of consumption growth disasters. The challenge lies in connecting the risk-neutral distribution of equity returns implied by options to the ...true distribution of consumption growth. First, we compare pricing kernels constructed from macro-finance and option-pricing models. Second, we compare option prices derived from a macro-finance model to those we observe. Third, we compare the distribution of consumption growth derived from option prices using a macro-finance model to estimates based on macroeconomic data. All three perspectives suggest that options imply smaller probabilities of extreme outcomes than have been estimated from macroeconomic data.
The Value of Control in Emerging Markets Chari, Anusha; Ouimet, Paige P.; Tesar, Linda L.
Review of financial studies/The Review of financial studies,
04/2010, Letnik:
23, Številka:
4
Journal Article
Recenzirano
Odprti dostop
When a developed-country multinational firm acquires majority control of a firm in an emerging market, there is an economically large and statistically significant increase in the acquiring firm's ...stock price. In 1986-2006, developed-market acquirers experienced positive and significant abnormal returns of 1.16%, on average, over a three-day event window. Positive acquirer returns and dollar value gains appear unique to emerging-market mergers and acquisitions and are not replicated when the same developed-market acquirers take over firms in developed markets. The size of the stock price increase is more pronounced (a) the weaker the contracting environment in the emerging market and (b) for industries with high asset intangibility.
Does Terrorism Work? Gould, Eric D.; Klor, Esteban F.
The Quarterly journal of economics,
11/2010, Letnik:
125, Številka:
4
Journal Article
Recenzirano
This paper examines whether terrorism is an effective tool for achieving political goals. By exploiting geographic variation in terror attacks in Israel from 1988 to 2006, we show that local terror ...attacks cause Israelis to be more willing to grant territorial concessions to the Palestinians. These effects are stronger for demographic groups that are traditionally right-wing in their political views. However, terror attacks beyond a certain threshold cause Israelis to adopt a less accommodating position. In addition, terror induces Israelis to vote increasingly for right-wing parties, as the right-wing parties move to the left in response to terror. Hence, terrorism appears to be an effective strategy in terms of shifting the entire political landscape to the left, although we do not assess whether it is more effective than non-violent means.
By integrating staggered interstate banking deregulation into a gravity model following Goetz, Laeven, and Levine (2013), (2016), we construct a time-varying, bank-specific instrument for geographic ...diversification and investigate its causal effect on corporate innovation via the lending channel. We find that bank geographic diversification spurs corporate innovation and enhances the economic value of innovation. We identify relaxing debt covenants and alleviating borrowers’ financial constraints as the two underlying mechanisms explaining the documented effects. Moreover, by offering lenient covenants, geographically diversified banks provide greater financial and operational flexibility to borrowing firms, enabling them to engage in future mergers and acquisitions.
This paper offers a reappraisal of the impact of migration on economic growth for 22 OECD countries between 1986–2006, and relies on a unique data set we compiled that allows us to distinguish net ...migration of the native-and foreign-born populations by skill level. Specifically, after introducing migration in an augmented Solow-Swan model, we estimate a dynamic panel model using a system of generalized method of moments (SYS-GMM) to address the risk of endogeneity bias in the migration variables. Two important findings emerge from our analysis. First, there exists a positive impact of migrants' human capital on GDP per capita, and second, a permanent increase in migration flows has a positive effect on GDP per worker. Moreover, the growth impact of immigration is high even in countries that have non-selective migration policies.
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