Business Combinations Research Articles

Evidence of the Italian special purpose acquisition company

In 1992 David Nussbaum with the support of the law firm Graubard Miller devised the formula of the specified purpose acquisition companies (SPAC): a financial vehicle that has the flexibility and functionality typical of the blank-check companies, which could provide investors with the right protections and guarantees in order to be a reliable instrument. The first SPAC officially debuted in 2003 through the Initial Public Offering (IPO) of Millstream Acquisition Corporation which then completed the merger with Nations Health in September 2004. In 2005 the first SPAC got listed in European Market and in 2011 the first SPAC joined in the Italian market. The aim of this research is to investigate the features of the Italian SPACs System because it’s becoming a large phenomenon in Italy. This new type of investment is able to fit the needs of small-medium Italian companies, to solve crisis difficulties, to find new finance to grow, to be a good instrument for opening up venture capital and institutional investors respecting the past business history and the safeguard of corporate control. The study, then, performs an analysis on the Italian SPACs by examining their target firms, stock performance before and after the business combination and the impact of the SPACs on SME corporate governance models. These results will be compared with those of other research developed by academic literature.

Research of features of financial management in business combinations

Research of features of financial management in business combinations

The Justifiability of Financial Reporting Preferences in Accounting for Intangibles in Business Combinations

We test whether an impending change in the accounting for goodwill mitigates bias in the initial values that acquirers assign to intangible assets. Results of two experiments with experienced professional participants suggest that the new accounting alters, but does not eliminate, bias in acquisition-date fair values. Specifically, we provide the new insight that acquirers have a preference to minimize the value of recognized goodwill when the initial fair values assigned to intangibles do not affect future earnings, as under the planned accounting change. Further, this preference regarding the composition of the balance sheet appears to be specific to goodwill. Our research also complements previous archival evidence by providing causal evidence that acquirers are more likely to bias initial fair values when there is significant uncertainty in their private information about asset value. In contrast, a low level of uncertainty “psychologically ties acquirers’ hands” such that they do not bias their fair value estimates. Our theory and results provide important input to standard setters and practitioners regarding an unanticipated consequence of the impending change in accounting for intangible assets.

Modern hotel tecnology trends for hospitality industry

The leisure and hospitality industry is one of the driving forces of the global economy. The widespread adoption of new technologies in this industry over recent years has fundamentally reshaped the way in which services are provided and received. In this paper, some of the state-of-the-art technologies are explored that are currently employed in the hospitality industry and how they are improving guest experiences and changing the hospitality service platform. We also envision some potential future hospitality services we can expect as the Internet of things (IoT) technology keeps growing. The subject of the research is the activity of hotel enterprises. The purpose of the research is the penetration of IT in the management of the hotel business. As a result the current state of IT use in hotel complexes has been investigated and practical experience in using IT in the hospitality industry has been considered. According to the World Tourism Organization (WTO), today there are more than 16 million hotels in the world, with 20% of them belong to hotel chains. The largest number of hotel enterprises is concentrated in the countries of Europe and North America, which accounts for 72% of the total hotel base. An interesting note that over the last 10 years other types of businesses have begin to recognize the unique combination of skills which hospitality students possess - the combination of sound business and management along with a service orientation. Therefore, other industries have begun to recruit hospitality graduates including health care and retail. This is particularly exciting time to be associated with the industry given the ample career opportunities, the economy, new developments, emerging markets, internationalization of companies ad concepts, etc. The prevailing philosophy in hospitality education is that the best way to the top is through a strategic combination of education and experience. The outlook for the industry is very positive but there are several trends/factors that are affecting how the industry operates and the products and services that are offered to the customers.

Specifičnosti računovodstvenog tretmana poslovnih kombinacija (spajanja)

Specifičnosti računovodstvenog tretmana poslovnih kombinacija (spajanja)

Corporate Social Responsibility of Business in the Natural and Urban Areas of the Lublin Province

Summary Subject and purpose of work: The purpose of the study was to compare the behavior of companies located in the areas of nature value and in their proximity with companies located in urbanized areas in the Lublin Region in terms of Corporate Social Responsibility (CSR). Materials and methods: The study was conducted by means of the diagnostic survey method, using direct interviews. Results and conclusions: Companies located in valuable natural or close to natural areas tend to undertake ecological and environmental investments (27.68%), care for the common good (54.46%), and treat employees well (54.46%) as compared with the companies located in urban areas (10.72%, 25.89% and 25.89%, respectively). Sensitivity to nature is primarily the result of the company’s direct contact with nature, the recognition of the importance of protecting it, as well as of good treatment of employees, that is it results mainly from the combination of business and personal relationships with employees. Firms located in urban areas are much more likely to support charitable donations (22.33%), which is a result of higher returns by these companies and more frequent requests for financial assistance. Further research in this regard should concern factors that make the entrepreneurs more willing to implement CSRs in their companies.

Is There Any Value in the Banks Brand?

Traditionally the literature show that public brand value estimates (such as the ones published by Interbrand, Brand Finance or Brand Z), in the context of industrial quoted companies, are incorporated in stock prices, implying that brands significantly contributes to the value generation process in a company. No such study was carried out at the level of the banking sector. This could be due to the attribution of a marginal importance of brands, among other intangible assets, in the banking sector, as highlighted by the literature. In more recent years more and more evidences give evidence of the importance of brands in banking sector; it should be noted that: 
 
 - many banks, as a result of the Purchase Price Allocation process - PPA (pursuant to IFRS 3 Business Combinations) consequent to banking aggregations (mergers or acquisitions), have booked in their financial statements (separate or consolidated) brand values;
 
 - reports published by independent parties such as Brand Finance, publishes brand values specifically for the banking sector.
 
 The aim of this article is therefore to assess if the brand contributes to the value generation process in the banking sector. To test our hypothesis we run a regression on a European sample between market capitalization of major banks and their brand value published by independent expert Brand Finance from 2008 to 2017, with a classic value relevance analysis. Our results demonstrate that brand contributes to the value generation process in the banking sector.

The Operating Returns to Acquired Intangible Assets

There is a long-standing debate on the recognition of intangible assets. Proponents of recognition argue intangibles are a key source of value and profitability, while opponents note that recognizing intangibles involves considerable measurement uncertainty. Using a broad sample of business combinations in the U.S. from 2003 to 2014, we find that the recorded values of acquired intangibles are a significant predictor of future operating income at one-, three-, five-, and seven-year horizons, using both in- and out-of-sample tests. Further, the predictive ability of intangibles dominates that of acquired tangibles, with goodwill being more important, but identifiable intangibles contributing as well. However, in cross-sectional tests we find that the predictive ability of intangibles weakens in settings where the relevance and measurement reliability of intangibles are lower. These results are informative to policy makers considering whether the costs of identifying and valuing intangible assets are justified.

Binding emotions for long-term continuity of family business? The foundation of family rule and Mitsui’s business in late 19 th and early 20 th century Japan

Cet article étudie comment les entreprises familiales japonaises ont réussi à transformer leur propriété familiale au cours de la période de changements radicaux dans les affaires et l’économie. Une attention particulière sera portée sur le cas des familles Mitsui qui ont établi l’un des conglomérats d’affaires influents (zaibatsu) du Japon moderne. À la fin du XIX e siècle, les familles ont été confrontées à de sérieux et inévitables défis qui ont nécessité des réformes pour réorganiser et réaménager leur entreprise. Ces réformes comprenaient le remodelage du système de propriété familiale, caractérisé par la combinaison des systèmes traditionnels d’entreprise et de ménage pour que les membres de la famille possèdent en commun leurs biens, afin de s’adapter aux systèmes juridiques et d’entreprise modernes. En outre, en raison du succès de la transformation de leur entreprise, le cas des familles Mitsui a été considéré comme un modèle pour de nombreuses familles marchandes japonaises qui partageaient les mêmes caractéristiques dans le contexte de la propriété familiale, et elles ont utilisé ce modèle pour assurer la continuité et la survie de leur entreprise familiale. Par conséquent, le cas de Mitsui illustre certaines stratégies de survie pour les entreprises familiales japonaises dans une période où le Japon a été confronté à des pressions internes et externes pour l’internationalisation des affaires. Bien que de nombreuses recherches, y compris japonaises et anglaises, aient été produites pour analyser les affaires et les réformes de Mitsui pendant cette période, l’un des buts de notre article est d’ouvrir une nouvelle perspective en reconsidérant les réformes des maisons des familles Mitsui liées à la réorganisation de leurs entreprises à partir d’autres directions grâce aux documents conservés aux archives de Mitsui (Mitsui Bunko). En particulier, l’article montre comment des systèmes complexes et complets ont été construits pour réguler les habitudes et les émotions de la famille, notamment des règles familiales ( Mitsui Kaken ), pour assurer la continuité à long terme de l’entreprise dans ces nouvelles circonstances.

Effects of business combinations on the competitive environment

<p>This paper deals with the results of the businesses combinations and the advantages felt in solving the problems of certain entities, the extension on other markets or obtaining increased quotas on the market. Also, businesses combinations can generate disadvantages regarding the access to credits or negative effects on the salary. A business combination is based on taking risks an has advantages as well as disadvantages, on both the short and the long term, while the decision of making it has in view the development strategy of the organisation. The aim of the paper is to analyze and balance the benefits and disadvantages of business combinations. It is questioned the need to use this method and its use only for the advantages obtained despite the existing disadvantages.</p>

A Research Note on Bargain Purchase Gains on Acquisition

AbstractThis research note explores the incidence, amounts, disclosure and potential sources of bargain purchase gains reported by an Australian sample of firms during 2013–15. It finds that 7.58% of the sample acquirers reported bargain purchase gains during this period. The median gain as a percentage of consideration transferred was 18.90%. In contravention of IFRS 3 Business Combinations, not all acquirers with material bargain purchase gains disclosed in notes why the gain arose. Finally, the note reports preliminary evidence suggesting uncertainty about the sources of the gain.

Time to get it Right: An Examination of Post-Acquisition Fair Value Adjustments

I examine the role of preparer information gathering and processing constraints in fair value measurement. Using two business combination samples, I investigate whether acquirers adjust the initial fair value measurements of identifiable assets and liabilities during the one-year measurement period permitted by FASB Statement 141(R). Empirical proxies for preparers' information gathering and processing costs explain variation in the incidence and magnitude of measurement period adjustments (MPAs). I classify abnormally large MPAs that allow firms to exceed the consensus analyst forecast as suspect adjustments. Suspect adjustments exhibit little association with earnings management incentives and no association with future goodwill impairment. Overall, the results suggest that acquirers use the measurement period when there are concerns about the quality or availability of information, consistent with the FASB's intentions.

Analysis of Business Combination Implementation at PT China Construction Bank Indonesia

<p>This study aims to review the implementation of mergers conducted by the company. In Indonesia, merger activities are regulated in Indonesia Statement of Financial Accounting Standards Number 22 (hereinafter referred to as PSAK 22) concerning Business Combinations. Increased merger activities in the business world are driven by changes in economic conditions. The rise of merger and acquisition activities was caused by various things, such as technological advances, increasing financial conditions, excess capacity/financial failure, international market consolidation and deregulation.</p><p>The research method used in this research is qualitative descriptive with case studies of business combination events that occurred between PT Bank Windu Kentjana Internasional, Tbk as the party which received the merger and PT Bank Antardaerah as the company which joined. Regarding ownership, the name of PT Bank Windu Kentjana Internasional, Tbk changed to PT China Construction Bank Indonesia, Tbk (PT CCB Indonesia, Tbk).</p>The results of this study indicate that in general, the consolidated report of PT CCB Indonesia, Tbk for the period ended December 31, 2016, in general, has been prepared by PSAK 22, 2015.

Combinação de Negócios e os impactos societários e tributários das IFRSs no Brasil: desafios apresentados aos operadores do Direito e aos operadores das IFRSs

Resumo As operações de Combinação de Negócios (CN) indiscutivelmente constituem uma área de estudo multidisciplinar de grande riqueza conceitual. Questões do ramo do Direito Societário, do Direito Tributário e do Direito Econômico emergem naturalmente. O estudioso no tema também é instigado a enveredar pelos campos da Contabilidade Societária e Tributária e das Finanças Corporativas na busca por uma melhor compreensão do mesmo. Este artigo tem o objetivo de analisar algumas CN, sob uma abordagem de pesquisa normativa, considerando dispositivos das IFRSs voltados à disciplina do tema, em particular a IFRS n. 3, que espelha no Brasil o CPC n. 15, e os seus desdobramentos em matéria de Legislação Tributária e Societária. Verifica-se que muitas controvérsias surgem em matéria de Direito Societário e de Legislação Tributária. Anomalias no tratamento contábil societário de algumas operações são observadas também, como é o caso da contraprestação contingente liquidada em ações de própria emissão da sociedade controlada. O autor espera que este trabalho contribua para o debate das questões abordadas.

Вопросы регулирования трансфертного ценообразования в системе налогового контроля России

In article the questions of tax control of the prices of transactions between vertically integrated structures of multinational corporations, holdings and other business combinations are considered. An assessment of modern model of tax administration, from the point of view of the preferences and privileges provided to corporations is given. Features of assessment of criteria of controllability of transactions and instruments of control of transfer pricing are revealed. Constructive proposals on realization of the stimulating capacity of tax system taking into account the interests of development of small and medium business are given.

Acquisition premiums and the recognition of identifiable intangible assets in business combinations pre- and post-IFRS adoption

PurposeThis paper aims to evaluate the relation between acquisition premiums and amounts recognised as identifiable intangible assets (IIAs) in business combination, in periods before and after transition to International Financial Reporting Standards (IFRS).Design/methodology/approachThis is an empirical archival research using data from business acquisitions.FindingsIn the pre-IFRS period, there is evidence of firms recognising IIAs in business combinations having higher acquisition premiums. This association of acquisition premiums and IIAs ceased with transition to IFRS, notwithstanding the relative latitude provided in accounting standards for the recognition of IIAs.Research limitations/implicationsThis paper complements the study by Su and Wells (2015) which founds little association between IIAs and performance subsequent to business acquisitions prior to transition to IFRS. The results here suggest that it is attributable to overpayment. Problematically, the incentives for opportunism remain and an issue requiring address is whether alternative sources of accounting flexibility in relation to business combinations exist, such as goodwill which is no longer subject to mandatory amortisation.Practical implicationsThe results are consistent with accounting opportunism and suggest “overpayment” and accounting flexibility having an economic consequence. This would be expected to result in asset impairments in subsequent periods; however, there is little evidence of this occurring.Social implicationsThese results have relevance for regulators concerned with the operation of regulation relating to business acquisitions (AASB 3) and intangible assets (AASB 138).Originality/valueThis paper complements a number of papers concerned with the recognition of IIAs in business combinations and confirms what many researchers in the area typically assume (triangulation).

The Business Family as the Business Model of Our Time

<p>The information technology has reduced the cost of business transactions large managerial corporations are giving way to small family business firms. It is good change because family businesses could not only aim to sustain the family economically but also could aim nurturing children. The role of ethics in family business is has not been studied systematically. This paper has argued that family firms are more socially responsible that non-family firms because family firms are breeding ground for core family values. This paper also argues that business literature should lay emphasis on virtues and character based business in place of value and culture based business. To manage for organizational virtue and character is to treat ethics as an end in itself. To manage by values and characters is to treat ethics as means for some ulterior motive. If employees are told that they should be honest because it pays then profit may trump in case of a conflict. The combination of family virtues and business can make the family busines as moral model or moral leadership for all types of business in this era of high demands for accountability.</p>

The Business Family as the Business Model of Our Time

<p>The information technology has reduced the cost of business transactions large managerial corporations are giving way to small family business firms. It is good change because family businesses could not only aim to sustain the family economically but also could aim nurturing children. The role of ethics in family business is has not been studied systematically. This paper has argued that family firms are more socially responsible that non-family firms because family firms are breeding ground for core family values. This paper also argues that business literature should lay emphasis on virtues and character based business in place of value and culture based business. To manage for organizational virtue and character is to treat ethics as an end in itself. To manage by values and characters is to treat ethics as means for some ulterior motive. If employees are told that they should be honest because it pays then profit may trump in case of a conflict. The combination of family virtues and business can make the family busines as moral model or moral leadership for all types of business in this era of high demands for accountability.</p>

When does competition mitigate agency problems?

This paper examines how the performance correlation of firms in an industry affects the degree to which product market competition mitigates agency problems. Consistent with theory, I find that in industries with high firm performance correlation, product market competition reduces the adverse effect of business combination (BC) laws on firm operating performance, while in industries with low performance correlation competition does not have such an effect. My results are robust to (i) the use of different measures of performance correlation, competition, and operating performance; (ii) excluding firms that are not exogenously affected by BC laws, (iii) dropping the years that are affected by the first-generation state antitakeover laws. I find similar results for stock prices when examining the stock market reactions to the first newspaper reports of BC laws. Overall, the disciplining effect of competition depends positively on an industry's performance correlation.

The genesis of the “goodwill” concept in financial and managerial accounting

The paper provides an analysis of the evolution of the “goodwill” concept from 1982 up to now on the basis of definitions found in foreign and national literature. The study focuses on conceptual foundations for accounting goodwill at an enterprise.Within the study the following general and special research methods for describing economic phenomena and processes are applied: historical and logical – to identify evolutionary approaches to defining the concept of “goodwill”; generalization, grouping and comparison – to study the essence of economic concepts and reinforce their definitions; analysis, synthesis, induction and deduction – to describe the main features of goodwill which reflect the economic nature of the concept.Based on foreign and national research literature, a review of definitions for the concept of “goodwill” is presented in the chronological order. In the article, a reinforced definition is formulated, which is tailored to the current environment of doing business and requesting for information. The evolution of conceptual foundations for accounting goodwill which complies with international and national standards is described. The structure of goodwill is graphically de- picted in accordance with International Financial Reporting Standard 3 Business Combinations. It is found that goodwill at an enterprise is not always economically justified and does not indicate the existence of non-economic amenities.A significant difference is found between the interpretation of the concept of “goodwill” in accounting and economic interdisciplinary aspects. Speculative reasons for the positive variance in the implementation of integration agreements are described, which confirm the discrepancy between economic and accounting definitions of goodwill. It is pointed out that there is a need for the convergence of existing approaches in order to unify the conceptual foundations of goodwill as an accounting concept. It is proposed to record the internal goodwill on accounts as an economic embodiment of non-economic amenities that the enterprise owns.