Merger Risk Research Articles

Risk Analysis and Preventive Measures of Enterprise Merger and Acquisition

With the rapid development of the "Internet +" economy, the retail industry began to adjust the traditional business model in line with the development of The Times, and accelerated the deep integration with the Internet through the integration of resources. In this context, the "new retail" era has officially arrived, compared with the traditional retail industry, the new retail model through the combination of online and offline services to achieve intelligence, precision, product quality, and personalized, retail growth has become a breakthrough point, because of this major retail enterprises have in the new retail format of mergers and acquisitions. Based on this background, this paper takes Suning Tesco's cross-border merger and acquisition of Carrefour as an example, and combines the historical background of new retail to study its merger motivation, merger risk and put forward relevant suggestions. By summarizing the problems existing in the process of enterprise merger and acquisition and merger experience, the study has certain objective and realistic significance.

The risks of mergers and acquisitions—Analyzing the incentives for risk reporting in Item 1A of 10-K filings

This paper investigates the motivations behind the associations between the M&A risk level and the M&A risk reporting. For a sample of 231 M&As, I performed a detailed content analysis of Item 1A of the 10-K filing after the completion of M&As. While the M&A risk reporting quantity captures the number of M&A risk factors, the M&A risk reporting quality additionally reflects the M&A risk reporting depth and width. The results suggest that the M&A risk reporting quantity and quality are related but not identical theoretical constructs. Overall, consistent with the transparency motivation, a higher M&A risk level encourages managers to increase the M&A risk reporting quantity and quality. Managers will disclose more M&A risk factors if the target firm is relatively large and from a foreign country, a relatively large amount of the purchase price is allocated to goodwill, and the M&A intensity is high.

Shutdown versus M&A: An empirical investigation of Slovenian incumbent firms’ responses to foreign competition

The paper investigates the shutdown and merger responses of heterogeneous incumbent firms to increased foreign competition. Foreign firm entry is confirmed to be significantly tougher than domestic firm entry in terms of its reallocation forces. Accounting for the competing nature of shutdown and merger risk, the results for Slovenian manufacturing firms during the later stage of Slovenia’s transition show that the entry of foreign firms via either FDI or exports increases the relative probability of incumbents deciding to shut down, while the incentive to react by merging is present only when foreign firms enter via a greenfield investment within the same region. While a shutdown decision is detected as the principal response in case of import competition, no predominance can be identified in incumbents’ reactions to FDI entry. Furthermore, firms with foreign owner(s) proved less likely to be a target of takeovers/mergers, although they tend to close down more easily than locally owned rivals.

Effects and Risks of Mergers and Acquisitions on Entrepreneurship in Banking and Finance: Empirical Study from Slovakia

This study examines effects of mergers and acquisitions on entrepreneurship in the banking industry and identifies substantial factors of changing in its financial performance and risks from aspect of bank profitability in the economy of Slovakia, using regression modelling. The relationships between the dependence of the profitability of banking sector and selected financial indicators from aspect of its performance have been surveyed spanning a period of nine years (2004-2012). The research problem is as following: Do mergers and acquisitions create a value added and are desirable or more risky from financial aspect in the market economy. The task of this study is to use the financial analysis and project a multiple regression model (using data 1997-2011) to determine the success level of bank merger/acquisition between CSOB Bank and ISTROBANK in 2009, operating on the Slovak banking market. In the research hypotheses we investigate if the real profit development strengthened due to the impact of the bank merger/acquisition and impact of risks due to the global crisis on the financial performance. The novel designed linear regression model with seven independent variables, based on the methodology of empirical studies, compares the estimated and real profit development before and after bank merger/acquisition (2009-2011) as well. Our findings indicate that comparable models based on the existence of common relationships and dependences can be applied in other countries of the EU and present implications for decisions-making in the field of the increase global financial performance, trends and growth strategies of commercial banks.