Likelihood Of Mergers Research Articles

Enterprise Systems and the Likelihood of Horizontal, Vertical, and Conglomerate Mergers and Acquisitions

This paper examines the relationship between enterprise systems (ES) and the likelihood of mergers and acquisitions (M&A). The key argument is that since ES can reduce agency costs associated with internal coordination and the transaction cost of coordinating with external partners, ES may be related to the likelihood of M&A. Using a sample of 3,289 firms headquartered in North America from 2010 to 2018 that made 8,373 M&A deals, the empirical analysis suggests that ES are positively related to horizontal acquisitions and negatively related to conglomerate acquisitions. However, as internal coordination costs increase, ES are becoming associated with more conglomerate M&A, especially when the goal is to introduce new products and enter new markets. Also, in contexts where partners require transaction specific investments, ES are associated with a relative decrease in the number of horizontal and vertical M&A. These findings suggest that ES create options for managers to engage in ownership as well as information-based coordination, depending on the internal and external coordination costs as well as the goals of the organization.

An Econometric Analysis of the Brazilian Merger Policy

We study the factors that influence the decisions that are made by the Brazilian competition authority on mergers and compare these factors with the Brazilian merger policy guidelines. Estimates of discrete choice models show that high post-merger market share and adverse entry conditions—both of which are included in the guidelines—significantly increase the likelihood of mergers’ being challenged. Market regulation—a factor that is not included in the guidelines—also influences these decisions. Our analysis indicates that the guidelines do not cover all relevant aspects of the decision-making process and shows evidence of the interaction between merger and regulatory policies.

Financial Market Friction and Corporate Restructuring Activities in China

ABSTRACT This study empirically investigates the effect of external financial market friction on restructuring activities, based on panel data of listed Chinese firms from 2004 to 2018. The results show that there is a positive correlation between financial market friction and the number of restructuring deals. We also find that high financial market friction increases preference for cash payments and the likelihood of mergers and acquisitions. These findings add to the restructuring literature by capturing heterogenous restructuring forms. They also deepen the understanding of the firm boundary theory, by suggesting that firms have incentives to increase their scopes when facing external market distress.

Does a Target Platform’s Reverse Resource Transfer Always Mean a Loss? The Perspective of User-Generated Content Volume

We have witnessed tremendous growth in platform firms over the past several years. Given the “winner take all” principle of two-sided markets, platform firms usually engage in aggressive strategies to compete, increasing the likelihood of mergers and acquisitions (M&As). The extant literature, however, concentrates on competition strategies while neglecting cooperation strategies in the context of platform M&A. Thus, this study focuses on the implementation of a reverse resource transfer policy during the post-M&A integration of two transaction platforms. Using data obtained from the target platform of the M&A event, we perform regression discontinuity design to analyze the causal effect of the policy change on user-generated content (UGC) volume of merchants in a target platform. The results indicate that the policy change leads to a positive discontinuity jump for the UGC volume of merchants around the cutoff point. Specifically, policy change increases the volume of reviews with pictures and the number of interactions within reviews in both the short and long run. These findings help to deepen our understanding of the impact of reverse resource sharing of the target platform firm on the generation of UGC and clarify how different types of agents can benefit from the strategy.

Determinants of Cross-Border Mergers and Acquisitions: An Econometric Study of Transactions in the Euro Zone between 2001 and 2010

Following to the previous literature, this paper intends to study the main determinants that lead to cross-border mergers and acquisitions in the EURO zone, by analysing a total sample of 980 transactions occurred between 2001 and 2010 in the 13 EURO zone original member countries, 218 of which are cross-border operations. Nevertheless, and unlike the previous literature, which identified the currency differences and geographical proximity as the most important proxies of this kind of transactions, it is our intention to analyse thoroughly other factors, namely valuation differences and international taxation issues, that may influence the likelihood of crossborder operations. The Ordinary Least Squares (OLS) regression results suggest that some issues such as international tax arbitrage and a lower complexity of the target country’s fiscal rules, the quality of accounting disclosure, the level of each country’s bureaucracy, the standards of corporate governance, and bilateral trade increase the likelihood of mergers between two countries. Similarly to previous literature, valuation appears to play a key role in motivating this specific type of transactions: firms in countries whose stock market has increased its value and that present, at some point, a relatively high market-to-book value tend to be acquirers, while firms from economies with a lower performance tend to be targets.

Post‐merger performance of agricultural cooperatives

During the 1990s, the rate of consolidation among agricultural cooperatives, including mergers, acquisitions, strategic alliances, and joint ventures, increased significantly. While post‐merger performance has been examined extensively for investor‐owned firms, this has not been the case for agricultural cooperatives, primarily because these firms do not have an explicit profit motive or publicly traded stock. Results from a two‐stage econometric model reveal that a major motivation for cooperatives to engage in these activities is to circumvent capital constraints. Furthermore, the decision to merge and financial performance are jointly endogenous, with profitability positively influenced and sales growth negatively influenced by the likelihood of merger.

Living the vision: health care, social justice and institutional identity.

This paper will examine the topic of identity in Roman Catholicism from the perspective of topics contained in or absent from mission statements of 25 Catholic health care institutions. In particular, I will look at these from the perspective of social justice as well as how this and other topics such as human dignity, sanctity of life, stewardship, pastoral care and the likelihood of mergers with other institutions will affect the healing ministry of Catholic health care providers. The article will conclude that there are three key dimensions to Catholic health care: leadership in advocating reform of the current health care system, care for the marginalized and under-insured, and the provision of pastoral care in all institutions.

Service bundling and strategic equilibrium in the information services industry

The information service industry is characterized by successive levels of access; e.g., network service and data base service. Within this structure firms may have incentives to bundle services and exclude independent service providers from media access. This multilevel structure is incorporated into mathematical models that can be used to characterize interactions between unregulated firms in a variety of industries, including switched network services, software, and television. Incentives for vertical merger between complementary service providers are evaluated for several cases. We show that cross subsidy occurs under vertical merger, and that the likelihood of merger is greatest when one of the firms can unilaterally exclude other complementary firms from media access. In this case the access controlling firm is in a position to enforce bundled pricing and limit the availability of independently supplied services. This ability to bundle services leads to cross subsidy and merger, even in the absence of economies of scale or scope.