Corporate Takeovers Research Articles

The spiritual transformation of giving: Generosity’s constitution of the self and community in post-religious society

How has the ‘benevolent self’s relation to others changed as a result of (first) the liberalization of monotheisms and (then) the uneven transition to post-religious spiritual formations? The apparent (and misleading) effacement of the self in traditional monotheistic generosity has ultimately given way to a ‘liberal’ glorification of the self. In advanced liberalism (typically dubbed ‘neoliberalism’), the glorification intensifies, but paradoxically becomes self-critical. Post-religious spiritualities interact with these advanced liberal dynamics to open up new possibilities for self- and community-formation. Even though the contradictions between self-centeredness and self-criticism are most acutely experienced within American post-religious spirituality, a suggestive discussion of Egypt demonstrates that these trends are not exclusively ‘Western.’ In both contexts, the corporate takeover of spirituality confines alternative forms of generosity.

Strategic Decisions in Takeover Auctions: Recent Developments

We review recent research into how firms navigate four complex decisions in corporate takeovers: ( a) deal initiation, ( b) pre-offer toehold acquisition, ( c) the initial (public) offer price, and ( d) the payment method. We focus the evidence on public targets and the theory on first-price or English (ascending-price) auctions with two competing bidders and a single (pivotal) seller. The evidence shows that nearly half of bids are initiated by the target (not a bidder). Notwithstanding the large offer premiums, only a small fraction of bidders acquire a target toehold prior to bidding. The first bid rarely attracts rival bidders, suggesting effective competition deterrence. Bid jumps are high, as predicted when bidding costs are large. Pre-bid stock price run-ups reflect rational market deal anticipation and are understood as such by the deal negotiators. Bidders select stock payment when concerned with adverse selection on the target side of the deal.

Does product market competition affect corporate governance? Evidence from corporate takeovers

We examine the extent to which shareholders strategically allow a weak governance structure in response to increasing competition pressures in the product market. We treat acquisitions by rival firms as shocks that increase threats in a competitive product market. We find that firms adopt greater entrenchment provisions when there are greater competition threats. Moreover, firms with high institutional ownership – especially by dedicated investors – and​ board independence within the compensation committee are particularly aggressive, which is consistent with our theory that aggressive behavior represents a strategic decision by shareholders. Finally, we find positive relationship between the adoption of entrenchment provisions and firm’s future performance, but only for the adoption under relatively severe competitive pressures.

Controlling Shareholder Stock Pledge, Aggravated Expropriation and Corporate Acquisitions

We examine the effects of controlling shareholder stock pledge on corporate acquisition decisions and associated performance. Consistent with our aggravated expropriation hypothesis, we find that pledging firms in China initiate more takeovers, but these acquisitions conducted by pledging firms experience lower announcement returns. We adopt the difference in differences and the instrumental variable approaches to establish causality. Channel tests further reveal that pledging acquirers overpay for the deals and are more likely to be involved in related party transactions. Cross-sectionally, we find that the relations between the share pledge and corporate acquisitiveness and returns are more pronounced for non-SOEs and firms with high-level excess cash. Lastly, we document that pledging acquirers underperform in the long-run in terms of lower ROAs and a greater likelihood of goodwill impairment. Overall, our findings indicate that controlling shareholders increasingly expropriate minority shareholders through self-serving corporate takeovers after the stock pledge.

Spreading the sin: An empirical assessment from corporate takeovers

An acquisition of a company involved in socially undesirable activities can have important value implications. On the one hand, stocks in sin industries can be undervalued, and positive wealth effects might be created through risk sharing and a halo effect. On the other hand, acquiring sin stocks could increase litigation risk and the chance of product boycotts, and could hurt relations with employees and other stakeholders. Moreover, many investors avoid investments in sin stocks by applying negative screening. This article empirically establishes that shareholders of acquirer firms on average discount sin acquisitions. The negative wealth effects are stronger in countries with a greater focus on corporate social responsibility and for deals that are more likely to receive public attention. The article concludes that the costs of “sin” are considerable.

Less Popular but More Effective Toeholds in Corporate Takeovers

AbstractDespite their claimed advantages, toehold strategies have rarely been adopted in recent corporate takeovers and do not seem to increase acquirer returns. Are toeholds ineffective and becoming obsolete? We show that this is not the case. We find that toeholds are preferred for executing difficult takeovers. After controlling for such endogeneity in toehold-based acquisitions, toeholds do increase returns to acquirers. Moreover, the performance of toehold strategies improves over time due to more selective and more effective acquisition of toeholds. We find that this time trend is in part explained by learning from past toehold acquisitions.

Knowledge cannibalism in the European ICT sector

PurposeBased on the sample of the European information and communications technology (ICT) companies, this paper aims to identify which strategy of knowledge generation is most beneficial for companies: internal knowledge development or absorption of knowledge external to the company through corporate acquisition or merger.Design/methodology/approachIn this study, a longitudinal analysis of European ICT companies was conducted, contrasting internal knowledge creation, in the form of patent accumulation and research and development (R&D) efforts, with external learning through merger-and-acquisition (M&A) activities to uncover the best strategies for performance maximization.FindingsResults suggest that the two knowledge generation strategies are not complementary and demonstrate only marginal impact on organizational performance. However, intriguing patterns in combining the two became apparent. It was found that patent accumulation improves learning achieved through M&A activities, while also acting as a protection against corporate takeover. At the same time, the internal knowledge generation strategy was found to have a negative impact on financial performance, with external knowledge generation demonstrating somewhat mixed results.Practical implicationsThis paper provides practical insights into the patterns of internal and external knowledge generation activities. The two strategies were found not to be complementary, implying that companies must carefully choose their preferences.Originality/valueThis large-scale study tackles the interplay between internal and external knowledge generation strategies, which are mostly studied separately. It reveals new patterns in corporate acquisition and divestment strategies as sources of new knowledge. It also ties the knowledge paradigm to organizational performance.

The Real Effects of Corruption on Corporate Takeover Activity: Evidence From China’s Anti-Corruption Campaign

This paper examines how political corruption affects M&A activities. By exploiting the public enforcement of the anti-corruption campaign across different regions in China, we find in a difference-in-difference (DID) setting that the reduction in corruption increases cross-region takeover activities by 40% and deal volume more than doubles. Further analysis reveals that the reduction in market entry barriers and the decreased potential for political rent extraction are two plausible economic channels behind these real effects on corporate investments. Reduction in corruption also leads to higher bidder returns and improves post-acquisition performance. Furthermore, such a campaign significantly strengthens local economic development (higher GDP per capita growth, higher general government revenue per capita, and lower unemployment rate).

The Information Content of Target Price Forecasts: Evidence from Mergers and Acquisitions

This paper investigates the informativeness and value relevance of analyst target prices in the context of mergers and acquisitions (M&A). Our results indicate that firms with high 12-month ahead target prices relative to current stock prices are more likely to become a takeover target and offer premium and acquirers’ announcement returns are positively associated with firms’ target price premium. We also show that a long-short trading strategy formed on target prices and firms’ takeover likelihood generates economically significant returns. Our results are robust to a battery of additional analysis, and the informativeness of target prices is not subsumed by other analyst-forecast outputs such as earnings forecasts and recommendations. Overall, our findings suggest that analysts convey valuable information through target price forecasts, which are useful for participants in the corporate takeover markets.

The Economics of Law Enforcement: Quasi-Experimental Evidence from Corporate Takeover Law

This paper examines the impact of takeover law enforcement on corporate acquisitions. We use the European Takeover Directive as a natural experiment, which harmonizes takeover law across countries, while leaving its enforcement to the discretion of individual countries. We exploit this heterogeneity in enforcement quality across countries in a difference-in-differences-in-differences model, while employing an overall inductive research approach, following Karpoff and Whittry’s (2018) recommendation. We find that acquirer returns increase in countries with improvements in takeover law, driven by better target selection and lower cost of financing. The increase in acquirer returns is lower in weak enforcement jurisdictions, which we identify by developing a novel Takeover Law Enforcement Index (TLEI). The findings show that takeover law can mitigate agency conflicts, but its true value depends on its enforcement. Our results are robust to a number of robustness tests.

ANALISIS HUKUM TERHADAP KETERLAMBATAN PEMBERITAHUAN PENGAMBILALIHAN SAHAM (AKUISISI) PT. CITRA ASRI PROPERTY OLEH PT. PLAZA INDONESIA REALTY, TBK

Corporate takeover or acquisition is a legal act performed by a legal entity or natural person to take over the company's shares, by way of purchase of shares or in part or in full from the assets of the company. Provisions for Acquisition are regulated in Law No. 40 of 2007 concerning the Company and Government Regulation No.27 of 1998. Acquisition is one of the efforts made by the company to increase efficiency in the performance of a company sCo that the company becomes more productive in conducting business activities. Acquisition requires a separate mechanism as stipulated in Article 26 Government Regulation Article 29, 30, 15 of Law No. 40 of 2007. One of the legal problems that occur in the acquisition of a company is the delay in reporting the acquisition of shares that need to be reported administratively to the Business Competition Commission as stipulated in Article 29 of Act Number 5 of 1999 j.o Article 6 of Government Regulation No. 57 of 2010. The obscure issue of notifying the takeover of this share was faced by PT. Plaza Indonesia Realty, Tbk, which acquired PT. Citra Asri Property. So the authors conducted a legal analysis related to the issue of delays in the notification of the takeover of shares of PT. Citra Asri Propery by PT. Plaza Indonesia Realty, Tbk based on Case Decision Number: 02 / KPPU-M / 2017.

The Effect of Mergers and Acquisitions on Employees: Wealth Transfer, Gain‐Sharing or Pain‐Sharing?

AbstractThis paper considers whether gains made by shareholders from corporate takeovers are achieved at the expense of employees, as proposed by the ‘wealth transfer’ perspective. It analyses the contribution of employee lay‐offs, along with employment and wage changes, to the takeover premium and abnormal share price movements. The analysis draws on a unique dataset of British takeovers, combining documentary, share price and accounting data. The results show that lay‐offs planned at the takeover have either no effect or adverse effects on shareholder returns. Wages growth is positively, not inversely, related to shareholder returns from the second year after the takeover, whilst positive employment changes have a similar effect in the following year. Closer scrutiny indicates that labour and shareholders share gains when the firm does well, but share pain when it does not. There is evidence, therefore, that labour and shareholder interests can be complementary, rather than antagonistic, after takeovers.

Commentary: Economics and American Literary Studies in the New Gilded Age

AbstractThe marginalization of the humanities, while depressing, has at least provoked literary scholars into rethinking what they do and foregrounding the relevance of their research. The spike of interest in the economic humanities illustrates one path for making literary study more legible. To that end, several trends emerge in recent economic-themed literary scholarship. One trend of establishing the salience of humanistic scholarship proceeds by locating the origins of present concerns, such as the corporate takeover of democracy, in the past. While that approach is exciting and engaging, care must be taken not to flatten out differences between historical periods. A second salutary trend of making the humanities more intelligible develops interventionist and activist modes of scholarship—for instance, in the interest of making the economy more equitable, and by suggesting alternatives to current impasses. Through such approaches, the economic humanities can help demystify the epistemology of capitalism, the mental barrier determining what is and is not thinkable.

Strategic Decisions in Takeover Auctions

This essay reviews selected theories and empirical evidence describing how bidders and targets navigate four complex decisions involved in any corporate takeover attempt: (1) deal initiation, (2) pre-offer toehold acquisition, (3) offer price and revisions, and (4) the method of payment. We focus in particular on how first-price or English (ascending price) auctions with two competing bidders and a single (pivotal) seller help understand bidder and target incentives in each of these strategic decisions. While largely descriptive of tender offers for control, the auction framework also helps explain choices made in takeover negotiations where the outside option is the outcome of an open auction. Empirical findings include the following key observations: (1) A large fraction of control bids for public targets - about 50% - are initiated by the target and not the bidder. (2) Notwithstanding takeover premiums averaging 40+%, only a small fraction (less than 5%) of bidders acquire a partial ownership position (a toehold) in the target prior to bidding. However, when they do acquire a toehold, it is large (on average 20%). (3) Rival bids are observed in less than 10% of the contests, suggesting that the initial public bid deters further competition. When rival bidder do enter the auction, they do so surprisingly quickly - within two weeks of the initial bid on average - suggesting that bidder valuations are correlated. Bid jumps are large (around 30%), consistent with significant bidding costs. The evidence also supports the hypothesis that the pre-offer runup in the target's stock price includes an element of rational deal anticipation by the market, and that the runup is understood as such by the two parties in merger negotiations. (4) Contrary to theories of bidder opportunistic behavior, the likelihood that a given deal is paid in bidder stock is higher when the target is highly informed about the bidder's operations and so able to value the bidder shares more precisely. This evidence supports the (nested) alternative theory that the bidder's preference to pay in stock rather than in cash is driven by concerns with adverse selection on the target side of the deal. Also, the initial market reaction to the stock payment decision is such that there is no evidence of subsequent abnormal long-run performance for long-short portfolios sorted on cash- versus stock as the payment method.

Brazilian businessmen movements: Right-wing populism and the (dis)connection between policy and politics

We advocate for the relevance of taking Brazilian past experience and theorization of populism into account to understand present-day challenges. We depart from Weffort’s conceptualization of populism to discuss the role of businesspeople movements in supporting and taking control of the political agenda through think tanks. According to Weffort, populism is built over precarious alliances that tend to favor policy or politics in different moments. During times of divergence among political elites, a populist leader emerges as a mediator in orchestrating an unstable hegemony among asymmetric classes. At the same time, the classes included in the populist alliance give legitimacy to the populist leader; they hinder his capacity of imposing decisions. However, treason of the weakest within the alliance is certain. We suggest that the political role played by the think tank IPES, in 1960s Brazil, in reframing middle-class demands is akin to contemporary populist events in Brazil—represented by the election of Jair Bolsonaro—and in the Anglo-Saxon world. Trumpism and Brexit are examples of a still-powerful free-market ideology project wrapped up under a populist discourse (re)framed with the support of businessmen and think tanks. A corporate takeover of government and the imposition of a free-market agenda are certain, as it is the treason of the weakest in the populist coalition. CMS academics should engage with the demands that give birth to populist movements as a way to dispute the neoliberal hegemony and anti-democratic populist solutions.

After the gold rush: industrial re-configuration in the UK television production sector and content

Recent technological and market changes in the television industry appear to have transformed the corporate configurations which conduce to economic success in the production industry. As a result, many leading independent television production companies in the United Kingdom and elsewhere across Europe have become prime targets for corporate activity and many have been subject to takeover, often by the US media groups. Does this matter? Does the concept of ‘national’ television content still have any relevance in the digital era? Drawing on a multiple-case-study-based analysis of several UK-based television production companies over recent years, this article examines how corporate takeovers in the production sector may affect creative decision-making and impact on the nature and quality of television content. Against a background of increased investment interest from multinationals in indigenous players in the United Kingdom and across Europe, the analysis presented makes a timely and policy-relevant contribution to knowledge.

Peter Bloom and Carl Rhodes, Ceo Society: The Corporate Takeover Of Everyday Life. London: Zed Books Ltd., 2018. 281 pp. ISBN: 9 7817 8699 0723. Paperback $25.00

Australian Economic History ReviewVolume 59, Issue 3 p. 338-341 Book Review Peter Bloom and Carl Rhodes, Ceo Society: The Corporate Takeover Of Everyday Life. London: Zed Books Ltd., 2018. 281 pp. ISBN: 9 7817 8699 0723. Paperback $25.00 Kosmas Tsokhas, Kosmas Tsokhas orcid.org/0000-0002-1441-0567 Search for more papers by this author Kosmas Tsokhas, Kosmas Tsokhas orcid.org/0000-0002-1441-0567 Search for more papers by this author First published: 10 July 2019 https://doi.org/10.1111/aehr.12180Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Volume59, Issue3November 2019Pages 338-341 RelatedInformation

Book Review: Peter Bloom and Carl Rhodes CEO Society: The Corporate Takeover of Everyday Life

Book Review: Peter Bloom and Carl Rhodes <i>CEO Society: The Corporate Takeover of Everyday Life</i>

Piramidalne strukture i društva s uzajamnim udjelima kao oblik odstupanja od načela „jedna dionica – jedan glas“

U dioničkim društvima se ponekad koriste dionice koje daju nejednako pravo glasa, piramidalne strukture i drugi mehanizmi jačanja kontrole, koji predstavljaju odstupanje od načela proporcionalnosti. Uspostavljeni mehanizmi za jačanje i/ili zadržavanje kontrole, u čemu prednjači uporaba piramidalnih struktura relevantni su za situacije u kojima nad uvrštenim društvom dolazi do promjene kontrole (preuzimanje). U radu se nakon izlaganja taksonomije mehanizama za povećanje kontrole, posebna pozornost usmjerava na ona odstupanja od načela proporcionalnosti koja su nastala na tržištu kapitala, a to su piramidalne strukture i društva s uzajamnim udjelima. Prije njihove analize, ispituju se njihovi učinci na ponašanje unutarnjih dionika korporativnog upravljanja u uvrštenim društvima, do kojih dolazi pri dobrovoljnom i neprijateljskom preuzimanju, ali i u scenariju kada preuzimanja nema, vodeći pritom računa radi li se o društvu s disperziranom ili koncentriranom dioničarskom strukturom. Također se iznose i analiziraju empirijski pokazatelji instrumenata za pojačanje kontrole u pojedinim europskim državama. U posljednjem dijelu rada posebno se analiziraju metode izračunavanja glasačke snage kod piramidalnih struktura i društva s uzajamnim udjelima, nakon čega se iznose zaključna razmatranja.

An Analysis of the Legal and Regulatory Framework for Corporate Takeovers in Uganda: A Case Study of the Banking and Telecommunication Sectors of Uganda

An Analysis of the Legal and Regulatory Framework for Corporate Takeovers in Uganda: A Case Study of the Banking and Telecommunication Sectors of Uganda