Proximity to urban centers in mergers and acquisitions

2017 ◽  
Vol 43 (11) ◽  
pp. 1292-1308 ◽  
Author(s):  
Patty Bick ◽  
Matthew D. Crook ◽  
Andrew A. Lynch ◽  
Brian Walkup
Keyword(s):  
Mergers And Acquisitions ◽  
Information Asymmetry ◽  
Rural Setting ◽  
Target Firm ◽  
Data Set ◽  
Content Type ◽  
Acquiring Firms ◽  
Announcement Returns ◽  
Deal Completion ◽  
The Impact

Purpose The purpose of this paper is to examine the impact firm proximity to financial centers has on announcement returns and time to deal completion for mergers and acquisitions. Design/methodology/approach Using a data set of merger and acquisition activity from 1986 to 2014, target and acquiring firms are classified as rural or urban based on their geographic proximity to major financial centers. The impact of this proximity on short-term acquisition announcement returns and on the amount of time required to complete the transaction are tested. Findings Markets react more favorably to the acquisition of firms headquartered in a rural area, likely due to increased information advantage on the part of the acquiring firm. Furthermore, the acquisition of a rural firm requires greater time to completion. Practical implications Acquiring firms may be able to use information asymmetry to their advantage when acquiring firms located in a more rural setting with higher levels of information asymmetry. However, this requires the acquiring firm to generate an informational advantage and will also require a greater time commitment on average to complete the deal. Originality/value While prior literature has demonstrated that the distance between target and acquirer can affect acquisition returns and time to deal completion, this study adds to the literature by demonstrating that the geographic location of the target firm relative to major financial hubs can have a unique effect on mergers and acquisitions as well.

Determinants of acquirer-target distance in M & A

2016 ◽  
Vol 42 (2) ◽  
pp. 95-117
Author(s):  
Tae-Nyun Kim ◽  
Bumseok Chun
Keyword(s):  
Information Asymmetry ◽  
Negative Impact ◽  
Critical Factor ◽  
Target Distance ◽  
Target Firm ◽  
Content Type ◽  
Acquiring Firms ◽  
Announcement Returns ◽  
Information Advantage ◽  
The Impact

Purpose – The purpose of this paper is to propose several potential determinants of the distance between acquirer and target in M & A deals and examine the negative impact of the acquirer-target distance on announcement returns of acquiring firms. Design/methodology/approach – By employing two-stage regression model, the authors control for the potential endogeneity of acquirer-target distance. The authors use excess distance instead of raw distance between acquirer and target to look at the impact of acquirer-target distance on announcement returns. Findings – The authors find that acquirer-target distance in M & A tends to be longer when major hub airports are located closer to acquiring and target firms, target firm is located in a region with higher level of unemployment rate and median household income, and target firm is smaller and has more cash holdings. When controlling for the potential determinants of acquirer-target distance, including the level of targets information asymmetry, the authors still find that the excess distance between acquirer and target has a negative impact on announcement returns of acquiring firms. Originality/value – This study provides three main contributions to the literature. First, the authors find that acquirer-target distance in M & A is not exogenous and determined by several firm characteristics and regional economic factors. Second, the authors show that the acquirer-target distance has a negative impact on announcement returns even when controlling for the potential determinants. Third, by including information asymmetry measures as potential determinants of acquirer-target distance, the authors show that information advantage of local bidders may not be the most critical factor for their higher returns compared to the bidders from remote areas.

scholarly journals Do mergers and acquisitions affect information asymmetry in the banking sector?

2020 ◽  
Vol 46 (12) ◽  
pp. 1521-1547
Author(s):  
John S. Howe ◽  
Thibaut G. Morillon
Keyword(s):  
Mergers And Acquisitions ◽  
Information Asymmetry ◽  
Design Methodology ◽  
Banking Sector ◽  
Policy Makers ◽  
Content Type ◽  
Deal Completion ◽  
Asymmetry Measures ◽  
The Impact

PurposeThis paper aims to investigate the consequences of mergers and acquisitions (M&As) on information asymmetry in the banking sector. Specifically, the authors look at whether specific firm or deal characteristic influence information asymmetry levels between insiders and investors, as well as the impact of recent regulation such as the Dodd–Frank Act.Design/methodology/approachThe authors decompose the M&A process into three periods (pre-announcement, negotiation and post-completion period) and document changes in the information asymmetry levels between insiders and investors through the M&A process. The authors capture changes in information asymmetry using six different spread-based information asymmetry measures.FindingsThe authors find evidence that information asymmetry increases following M&A announcement and decreases following deal completion. These findings are more pronounced for acquisitions involving a private target, all-cash deals and for mergers, as opposed to acquisition of assets. We find that overall, successful mergers improve the quality of the information environment, while failed deals degrade it. Additionally, the enactment of Dodd–Frank reduced the magnitude of the changes in information asymmetry during the M&A process. The results are important to regulators, policy makers and investors.Originality/valueTo authors’ knowledge, this is the first study that looks at the effect of bank M&As on information asymmetry as well as the effect of regulations on information asymmetry.

Does the origin matter? The effects of cross-border mergers and acquisitions in France

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Federico Carril-Caccia
Keyword(s):  
Foreign Direct Investment ◽  
Mergers And Acquisitions ◽  
Direct Investment ◽  
Developed Countries ◽  
Emerging Countries ◽  
Intangible Asset ◽  
Data Set ◽  
Content Type ◽  
Cross Border ◽  
The Impact

PurposeThe present article analyses the effects of cross-border mergers and acquisitions (CBM&As) on targets' total factor productivity (TFP), employment, wages and intangible-asset investment. The author investigates whether the impact of CBM&As differs depending on the origin of the investing multinational (MNE). The author distinguishes between CBM&As from European countries, other developed countries and emerging countries.Design/methodology/approachThe author makes use of a unique firm-level data set of foreign direct investment in the French manufacturing sector. The authors applies propensity score matching and difference in differences to estimate the effect of CBM&As.FindingsThe results show that the consequences of CBM&As differ strongly depending on the origin. CBM&As from European MNEs have a positive impact on TFP, wages and intangible-asset investment, and those from emerging countries seem to increase wages and intangible-asset investments. In contrast, CBM&As that originate from MNEs from other developed countries do not have a significant effect.Originality/valueThis article contributes to the growing literature on the effects of foreign direct investment that highlights the relevance of accounting for the MNEs' origin. In particular, it is the first to address the impact of emerging-country MNEs' CBM&As in Europe.

The Buyout at Tru-Foods For You

2019 ◽  
Vol 9 (3) ◽  
pp. 1-18
Author(s):  
Linda Ronnie
Keyword(s):  
Mergers And Acquisitions ◽  
Learning Outcomes ◽  
Business Students ◽  
Target Firm ◽  
Content Type ◽  
Acquisition Process ◽  
Advantages And Disadvantages ◽  
Academic Level ◽  
The Impact

Learning outcomes Learning outcomes are as follows: to appreciate the people challenges imbedded in an acquisition; to assess and analyse the impact of an acquisition process; to propose appropriate strategies for managing an acquisition; to explore the advantages and disadvantages of mergers and acquisitions; to describe the main reasons for the failure of M&As. Case overview/synopsis Often mergers and acquisitions fail because of the inability to either manage or consider organisational and people management issues. It has also been acknowledged that during a process of extreme change or transition, such as a merger and acquisition (M&A), employees view the past as a time of safety and security with the future appearing as uncertain and confused. This teaching case study highlights these challenges and the change processes imbedded in an acquisition. The acquiring firm is Marshall Foods, a well-established branded continental distribution company with a strong emphasis on nutritional whole food products based in South Africa, and the target firm is Tru-Foods For You, a small Cape Town online company that sold natural and organic foods. The case study explores the challenges faced by the Tru-Foods For You owner and staff as a result of the acquisition process. The case describes the background to the acquisition, the processes during this phase and the resultant outcomes. Complexity academic level Business students who are studying at postgraduate or MBA level and executive short courses in strategy and change management. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 11: Strategy.

Linking ownership acquired in Chinese firms to post-acquisition innovation performance: role of institutional distance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nadia Hanif ◽  
Jianfeng Wu ◽  
Ahmad Bilal Babar
Keyword(s):  
Negative Binomial ◽  
Positive Impact ◽  
Negative Binomial Regression ◽  
Innovation Performance ◽  
Institutional Distance ◽  
Target Firm ◽  
Content Type ◽  
Acquiring Firms ◽  
Target Firms ◽  
The Impact

Purpose The primary purpose of this study is to explore the impact of acquired ownership in Chinese target firm on the innovation performance of developed economies (DE) acquiring firms. Furthermore, the study aims to empirically investigate the moderating influence of institutional distance between two parties’ home countries. Design/methodology/approach For the empirical investigation of the hypotheses, the authors identified cross-border technological acquisitions from the Securities Data Company between 1995 and 2015. A hierarchical negative binomial regression technique was used to analyze 177 technological acquisitions completed by DE acquiring firms in China. Findings Analysis of technological acquisition deals confirmed that acquired ownership undertaken in the Chinese target firms increases the DE acquiring firms’ post-acquisition innovation performance. The authors found that DE acquiring firms underperform in innovation in institutionally distant host countries. Originality/value This study contributes to the international business literature by explaining the importance of acquired ownership undertaken in the Chinese target firms for the DE acquiring firm’s innovation performance. Second, institutional theory defines how institutional uncertainty in terms of distance modifies the positive impact of acquired ownership on acquiring firm’s innovation performance.

Acquirer’s corporate reputation in cross-border acquisitions: the moderating effect of country image

2018 ◽  
Vol 27 (7) ◽  
pp. 858-870 ◽  
Author(s):  
Michela Matarazzo ◽  
Giulia Lanzilli ◽  
Riccardo Resciniti
Keyword(s):  
Corporate Reputation ◽  
Country Image ◽  
Target Firm ◽  
Content Type ◽  
Repurchase Intentions ◽  
Cross Border ◽  
Acquiring Firms ◽  
Good Reputation ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to investigate whether, in the context of a cross-border acquisition, the acquirer’s country image (CI) could moderate the relationship between the acquirer’s corporate reputation (CR) and consumers’ repurchase intentions towards the products of the post-acquisition target. Design/methodology/approach The authors examined the roles played by the acquirer’s CR and the acquirer’s CI on consumer behaviour by considering an Italian target firm with a high reputation and comparing four foreign acquiring firms with different combinations of CR (poor/good) and CI (high/low). Findings It was found that both CR and CI have a significant impact on Italian consumers’ intention to repurchase the products of the post-acquisition target. Furthermore, the results show a greater increase in consumers’ repurchase intentions when a good reputation of the acquirer is paired with a high CI for the acquirer, but a high CI cannot compensate for a poor CR. Originality/value The research investigates, in the context of cross-border acquisitions (CBAs), the impact of the acquirer’s CR and the acquirer’s CI on the host country consumers’ repurchase intentions after the CBA, which has not previously been thoroughly examined. It can help managers to understand the conditions under which CBAs will be favourably evaluated.

Increasing revenue and attendance in Canadian Baptist churches

2015 ◽  
Vol 42 (12) ◽  
pp. 1071-1089
Author(s):  
Alan Chan ◽  
Bruce G. Fawcett ◽  
Shu-Kam Lee
Keyword(s):  
Church Health ◽  
Eastern Canada ◽  
Data Set ◽  
Content Type ◽  
Factors Affecting ◽  
Scarce Resources ◽  
Baptist Churches ◽  
And Performance ◽  
The Impact ◽  
Simulation Exercises

Purpose – Church giving and attendance are two important indicators of church health and performance. In the literature, they are usually understood to be simultaneously determined. The purpose of this paper is to estimate if there a sustainable church congregation size using Wintrobe’s (1998) dictatorship model. The authors want to examine the impact of youth and adult ministry as well. Design/methodology/approach – Using the data collected from among Canadian Baptist churches in Eastern Canada, this study investigates the factors affecting the level of the two indicators by the panel-instrumental variable technique. Applying Wintrobe’s (1998) political economy model on dictatorship, the equilibrium level of worship attendance and giving is predicted. Findings – Through various simulation exercises, the actual church congregation sizes is approximately 50 percent of the predicted value, implying inefficiency and misallocation of church resources. The paper concludes with insights on effective ways church leaders can allocate scarce resources to promote growth within churches. Originality/value – The authors are the only researchers getting the permission from the Atlantic Canada Baptist Convention to use their mega data set on church giving and congregation sizes as per the authors’ knowledge. The authors are also applying a theoretical model on dictatorship to religious/not for profits organizations.

Curbing electronic shopper perceived opportunism and encouraging trust

2017 ◽  
Vol 117 (10) ◽  
pp. 2210-2226 ◽  
Author(s):  
Sonia San-Martín ◽  
Nadia Jimenez
Keyword(s):  
Information Asymmetry ◽  
Structural Equation ◽  
Design Methodology ◽  
External Quality ◽  
Content Type ◽  
Theoretical Approaches ◽  
Quality Signals ◽  
The Impact ◽  
Relevant Factors ◽  
Analyze Data

Purpose Consumers can face a situation of information asymmetry in electronic shopping (ES). The purpose of this paper to examine the relationships between: relational variables such as satisfaction, trust and perceived opportunism; and website cues (cognitive signals such as security and personalization, and experiential signals, such as design and entertainment). Design/methodology/approach The paper opted for the structural equation methodology to analyze data collected from 447 Spanish e-shoppers. Findings Results show different factors that relate to satisfaction, trust and perceived opportunism in ES. Satisfactory experience with ES and entertainment emerge as the most relevant factors to achieve trust and prevent perceived opportunism in e-commerce. Originality/value The five contributions of this study are: the introduction of variables from several theoretical approaches to the study of an agency problem in e-commerce; the study of different ways to gain buyer trust and reduce perceived opportunism in an electronic shopper-vendor relationship; the application of signaling theory as part of the process of helping the principal (e-shopper) to solve their shopping problem in a context of information asymmetry; the analysis of the impact of external cues from e-vendor/site, which allows for a comparison between internal experiences and external quality signals; and the study of entertainment as an important hedonic variable in order to have satisfied and confident e-shoppers.

The impact of organizational position level and cultural flow direction on the relationship between cultural intelligence and expatriate cross-border adaptation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ying Zhang ◽  
Yuran Li ◽  
Mark Frost ◽  
Shiyu Rong ◽  
Rong Jiang ◽  
...  
Keyword(s):  
Cultural Intelligence ◽  
Flow Direction ◽  
Power Distance ◽  
Cultural Adjustment ◽  
Data Set ◽  
Content Type ◽  
Cross Border ◽  
Organizational Position ◽  
The Impact ◽  
The Relationship

PurposeThis paper aims to examine the critical role played by cultural flow in fostering successful expatriate cross-border transitions.Design/methodology/approachThe authors develop and test a model on the interplay among cultural intelligence, organizational position level, cultural flow direction and expatriate adaptation, using a data set of 387 expatriate on cross-border transitions along the Belt & Road area.FindingsThe authors find that both organizational position level and cultural flow moderate the relationship between cultural intelligence and expatriate adaptation, whereby the relationship is contingent on the interaction of organizational position status and assignment directions between high power distance and low power distance host environments.Originality/valuePrevious research has shown that higher levels of cultural intelligence are positively related to better expatriate adaptation. However, there is a lack of research on the effect of position difference and cultural flow on such relationship. Our study is among the first to examine how the interaction between cultural flow and organizational position level influences the cultural intelligence (CI) and cultural adjustment relationship in cross-cultural transitions.

Exploring the impact of intellectual capital on company reputation and performance

2018 ◽  
Vol 19 (5) ◽  
pp. 915-934 ◽  
Author(s):  
Gianluca Ginesti ◽  
Adele Caldarelli ◽  
Annamaria Zampella
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Corporate Reputation ◽  
Intangible Asset ◽  
Competition Authority ◽  
Data Set ◽  
Content Type ◽  
Capital Efficiency ◽  
And Performance ◽  
The Impact

Purpose The purpose of this paper is to analyse the impact of intellectual capital (IC) on the reputation and performance of Italian companies. Design/methodology/approach The paper exploits a unique data set of 452 non-listed companies that obtained a reputational assessment from the Italian Competition Authority (ICA). To test the hypotheses, this study implemented several regression analyses. Findings Results support the argument that human capital efficiency is a key driver of corporate reputation. Findings also reveal that companies, which obtained reputational rating under ICA scrutiny, show a positive relationship between IC elements and various measures of financial performance. Research limitations/implications The study focuses on a single country; it is not free from the imprecisions of Pulic’s VAIC model. Practical implications This paper recommends companies that are interested to achieve a robust reputation should consider the human capital as a strategic intangible asset. Second, the results suggest that companies with an ICA reputational rating are able to leverage their intangibles to potentiate performance and competitiveness. Originality/value This is the first empirical investigation on the contribution of IC in generating value for corporate reputation. Additionally, the study contributes to the literature on the link between IC and performance by examining a sample of firms not yet explored in prior research.

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