Do frequent acquirers outperform in cross-border acquisitions? A study of Indian companies

2020 ◽  
Vol 30 (4) ◽  
pp. 491-514
Author(s):  
Samta Jain ◽  
Smita Kashiramka ◽  
P.K. Jain
Keyword(s):  
Operating Performance ◽  
Financial Statements ◽  
Acquisition Performance ◽  
Content Type ◽  
Acquisition Period ◽  
Cross Border ◽  
Acquiring Firms ◽  
The Impact ◽  
First Time

Purpose The purpose of this paper is to examine the impact of cross-border acquisitions (CBAs) on the financial and operating performance of acquiring firms from emerging economies in the long-term; the acquiring firms have been segregated into frequent (multiple) and first-time (single) acquirers based on their prior cross-border experience. The intent is to identify if overseas activities bring over and above advantage to multiple acquirers in terms of enhanced financial synergies and reduced costs, motivating them to engage in sequential international transactions. Design/methodology/approach The paper analyses the impact of CBAs announced and completed during 2004–2013 by Indian companies listed on the NIFTY 500 index. The post-acquisition financial and operating performance of Indian cross-border acquirers has been compared with their pre-acquisition performance. The average performance over three-years immediately preceding the acquisition year constitutes the benchmark for the post-acquisition performance. The post-acquisition period includes a year of integration followed by three successive post-integration years. Therefore, in operational terms, the research period extends from 2001–2017. The long-term performance of frequent (multiple) and first-time (single) Indian acquirers has been investigated comprehensively using a set of 16 financial ratios. The performance has been assessed using the secondary data collected from financial statements of acquiring companies; the financial statements and the list of CBAs by Indian companies have been obtained from Thomson Reuter’s EIKON database. Findings The financial and operating performance of frequent as well as first-time acquirers have depicted a similarly deteriorating trend during the post-acquisition period. These findings indicate that the international expansion of Indian companies is not guided by synergy creation potential and may be pushed by the overconfidence or over-optimism and agency conflicts of managers. This, perhaps, indicates that firms are being imprudent in investing free cash flows available with them. Originality/value The study is the first of its kind. No study, to the best of the authors’ knowledge, has analysed the performance of acquiring firms by segregating them into frequent and first-time acquirers using accounting measures of performance. More so, an extensive analysis of the long-term financial and operating performance of acquiring companies is rare to come across in the extant literature.

Operating performance of acquirers after acquisition: evidence from India

2019 ◽  
Vol 12 (3) ◽  
pp. 327-341
Author(s):  
Bipin Kumar Dixit
Keyword(s):  
Design Methodology ◽  
Operating Performance ◽  
Difference In Difference ◽  
Return On Assets ◽  
Content Type ◽  
Acquisition Period ◽  
Acquiring Firms ◽  
Book To Market Ratio ◽  
Matching Criteria ◽  
And Control

Purpose The purpose of this paper is to examine the operating performance of Indian using difference-in-difference (DD) methodology. It, further, examines whether there is a difference in the operating performance of acquirers doing partial and full acquisitions. Design/methodology/approach Four different benchmark criteria are used to select control firms, namely, size, size and industry, size and leverage, and size and book-to-market ratio. To measure the operating performance, return on assets (ROA) is calculated as the ratio between earnings before depreciation, interest, tax and amortization (EBDITA) and total assets (TA), expressed in percentage. This paper examines the ROA of event and control firms for three years in each pre- and post-acquisition period and finally compares them using the DD method. Findings Using a sample of Indian acquirers, the results show that the operating performance of Indian acquirers neither improves nor deteriorates after accounting for an appropriate benchmark. Operating performance of event firms significantly reduces in the post-acquisition period. However, non-acquiring firms of similar size and pre-operating performance also exhibit similar results. Finally results show that, the operating performance of acquirers making full acquisitions deteriorates. Originality/value It provides insights into the operating performance of Indian acquirers with an improved methodology, which accounts for the performance of control firms. The author also uses multiple matching criteria to find control firms to overcome the possible bias of the results dependent on the matching criteria. To the best of the author’s knowledge, the author could not find other studies comparing the operating performance of acquirers making partial and full acquisitions.

Governance and long-term operating performance of family and non-family firms in Australia

2015 ◽  
Vol 32 (4) ◽  
pp. 398-421 ◽  
Author(s):  
Enver Halili ◽  
Ali Salman Saleh ◽  
Rami Zeitun
Keyword(s):  
Agency Costs ◽  
Family Firms ◽  
Conflicts Of Interest ◽  
Operating Performance ◽  
Survival Rates ◽  
Listed Companies ◽  
Family Ownership ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this study is to conduct a comparative analysis of the long-term operating performance of family and non-family firms from the agency theoretic perspective. The analysis is focused on investigating the impact of family ownership on principal–agent conflicts of interest. Design/methodology/approach – This paper examines the relationship between firm operating performance and family ownership for a large sample of 677 Australian-listed companies. The paper uses the Generalised Method of Moments (GMM) estimator model developed by Arellano and Bond (1991) and used by other studies in finance (Baltagi, 2012; Bond, 2002; Mohamed et al., 2008). Findings – The empirical results show that firms with ownership concentration has a better operating performance due to the alignment of owner-management interests. This study also finds that family-listed companies have higher survival rates and perform better than non-family companies. Findings support the hypothesis that agency costs arise as a result of privileged access of information and self-interest behaviour of managers (outsiders) in firms with dispersed ownership structures. Originality/value – Earlier studies have only focused on short-term perspectives, particularly investigating small and medium types of Australian family businesses from narrow aspects, such as productivity, business behaviour, capital structure and leverage. Therefore, this paper has conducted a comparative examination of family and non-family firms listed on the Australian Stock Exchange (ASX) to identify the impact of agency costs on their financial performance.

scholarly journals Triage: line or nets? Early intervention and the youth justice system

2014 ◽  
Vol 13 (4) ◽  
pp. 147-160 ◽  
Author(s):  
Sarah Soppitt ◽  
Adele Irving
Keyword(s):  
Restorative Justice ◽  
Justice System ◽  
Design Methodology ◽  
Qualitative Data ◽  
Youth Justice ◽  
Content Type ◽  
The Impact ◽  
First Time

Purpose – The purpose of this paper is to present a discussion of the value of early diversion schemes, underpinned by the principles of restorative justice (RJ), for First Time Entrants (FTEs) into the criminal justice system (CJS). Design/methodology/approach – The paper focuses specifically on the findings of a 12-month study into the introduction of “Triage” by one Youth Offending Team (YOT) in the northeast of England. Findings – Re-offending data suggested that Triage is more effective in reducing re-offending than conventional justice practices, due to the restorative nature of the scheme. However, the qualitative data raised a number of issues, particularly relating to problems of “net-widening” and the impact of recording processes on young people's desistance, as well as the role of victim engagement in the process. These issues could undermine the long-term effectiveness of Triage and its successful application within other youth justice contexts. Originality/value – The paper aims to contribute further understanding regarding the impacts of RJ practices on reducing re-offending compared to traditional processes, and in particular, consider the role of implementation issues in the production of outcomes and impacts.

The impact of top management team characteristics and historical financial performance on strategic management accounting

2018 ◽  
Vol 14 (4) ◽  
pp. 455-472 ◽  
Author(s):  
Odysseas Pavlatos ◽  
Xara Kostakis
Keyword(s):  
Financial Performance ◽  
Role Theory ◽  
Management Accounting ◽  
Top Management Team ◽  
Financial Statements ◽  
Management Control ◽  
Content Type ◽  
Strategic Management Accounting ◽  
The Impact ◽  
First Time

PurposeThe purpose of this paper is to explore the impact of the top management team (TMT) characteristics and historical financial performance on strategic management accounting (SMA) usage.Design/methodology/approachObjective data were extracted from annual financial statements, as well as data from questionnaires in a sample of 94 enterprises were used.FindingsData analysis showed that one of the most important factors that influence the level of usage of SMA techniques is lagging historical performance of the enterprises. Those organizations that had low profitability in the past, due to the economic crisis, adopted and used innovative SMA tools more extensively, to improve their financial performance in the future. Based on Upper Echelons theory and Role theory, it was found that TMT characteristics (educational background, tenure, creativity) affect the adoption and the usage of SMA tools.Research limitations/implicationsFirst, this research was performed on one sector. Second, only a few SMA techniques were included. Third, some TMT characteristics were measured with only one item. As a result, it was not possible to check for reliability and validity of the measurements.Practical implicationsFirst, TMT characteristics influence the decision-making process and management control. This should be taken into account during the process of the selection of top managers. Moreover, SMA tools can be effectively used not only by CEOs and the managers of the accounting department, but from marketing managers as well. Consequently, a better communication between marketing and accounting managers is deemed essential to improve the performance of the company.Originality/valuePrevious research has studied the effect of CEOs and CFOs characteristics in the design of Management Control Systems. The authors explored for the first time, the effect of the characteristics of one more member of Board of the TMT, that is, Chief Marketing Officer (CMO), in the adoption and use of management accounting innovations (MAIs). Second, the authors studied one more characteristic of top level managers from Role theory, that is, creativity. Although many studies link creativity to the adoption of MAIs, this is the first time, to the best of the authors’ knowledge, that creativity is studied as an additional parameter that influences the adoption and use of SMA. Furthermore, this research provides additional knowledge about the effect of historical performance in MAIs usage. For the first time, it used objective data from annual financial statements, it calculated financial ratios, to measure historical financial performance. Moreover, this study provides knowledge about the effect of TMT characteristics in accounting choices in geographical areas, outside the USA.

Excess offer premium and acquirers’ performance

2018 ◽  
Vol 35 (3) ◽  
pp. 407-425
Author(s):  
Won-Seok Woo ◽  
Suhyun Cho ◽  
Kyung-Hee Park ◽  
Jinho Byun
Keyword(s):  
Market Reaction ◽  
Abnormal Returns ◽  
Market Returns ◽  
Content Type ◽  
Acquiring Firms ◽  
Study Methodology ◽  
Long Term Performance ◽  
Term Performance ◽  
The Impact

PurposeThis paper aims to investigate the causes of mergers and acquisitions (M&A) deals that acquiring firms pay excess premium beyond the market-expected level and examine the relation between the announcement return and long-term performance of the acquiring firms.Design/methodology/approachBased on a sample of 1,767 US firms’ M&A deals from 2000 to 2014, the authors use the expectation model used by Ang and Ismail (2015) to measure normal offer premium in an M&A deal. They conduct the standard event study methodology to observe the market reaction for acquiring companies on the announcement day. Buy-and-hold abnormal returns are used for the main explanatory variable so as to find the impact of the premium paid on the long-term performance of the acquirer.FindingsFirst, acquiring firms are faced with negative market returns when acquiring firms pay excess premiums. Second, poor long-term performance of the acquiring firms is observed if acquiring firms pay excess premium. Finally, the negative relation between excess premium and acquiring firms’ long-term performance weakens, as the sample period becomes longer.Research limitations/implicationsThe hypotheses and results of the empirical study are as follows. First, the acquirer’s market reaction on the announcement day is negative when it pays an excess offer premium. This is because the market perceives the premium to be greater than the value of the deal, which damages the value of the market, as it is not perceived as a proxy for future synergy. Second, the acquirer’s long-term performance is low when it pays the excess offer premium. It is the same result as the acquirer’s market reaction on the announcement day. This shows that the excess premium does not result in either a short-term positive reaction or a long-term profit for the acquiring shareholders. However, it is found that the relationship between the excess premium and the long-term performance of the acquirer decreases with time. This is because the long-term performance of the acquirer is more affected by management and other events after the deal.Originality/valueThe authors divide the total premium paid into the normal offer premium and the excess premium, and their focus is on the excess premium part. The main contribution of this paper is that it analyzes how the excess premium affects the market reaction on the announcement day and the long-term performance of acquiring firms.

Do cross-border acquisitions involving emerging market firms create value

2014 ◽  
Vol 52 (8) ◽  
pp. 1451-1473 ◽  
Author(s):  
P.C. Narayan ◽  
M. Thenmozhi
Keyword(s):  
Emerging Markets ◽  
Value Creation ◽  
Emerging Market ◽  
Operating Performance ◽  
Relative Size ◽  
Rank Test ◽  
Content Type ◽  
Cross Border ◽  
Emerging Market Firms ◽  
The Impact

Purpose – The purpose of this paper is to contribute to M&A literature by explicitly investigating whether cross-border acquisitions involving emerging markets, either as acquirers or as targets, create value and how is the performance outcome in such acquisitions impacted by deal-specific characteristics. Design/methodology/approach – This study uses industry-adjusted operating performance to measure acquisition gains, the Wilcoxon signed rank test to examine value creation potential and OLS regression to evaluate the impact of deal characteristics on acquisition gains. Findings – The authors find very pronounced value destruction when emerging market firms acquire targets in developed markets, the adverse outcome being further aggravated when the mode of acquisition is “tender offer” rather than a “negotiated deal”. On the other hand, when developed market firms acquire targets from emerging markets, there is an even chance of value creation, the outcome being favourably influenced by the pre-acquisition performance of the two firms, relative size of the target and cash (not stock-swap) as the mode of payment. Originality/value – The findings from this paper offer an important, statistically significant explanation on the value creation potential and the impact of deal characteristics on post-acquisition operating performance in cross-border acquisitions involving emerging market firms. This finding assumes immense significance, given the rapidly changing landscape of global M&A, witnessed through a continuous rise in the volume and value of cross-border acquisitions involving emerging market firms.

Overtourism in Indian cities: a case study of Nainital

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahfuzuar Rahman Barbhuiya
Keyword(s):  
Sustainable Tourism ◽  
Tourism Development ◽  
Development Plan ◽  
Content Type ◽  
Sustainable Tourism Development ◽  
Policy Interventions ◽  
Indian City ◽  
The Impact ◽  
First Time

Purpose This study aims to address the issue of overtourism, its causes and impacts and propose a strategy based on a theoretical overtourism matrix to be applied to the Nainital city. Design/methodology/approach Reports on rules and regulations from government authorities, court orders and newspaper reports were studied to understand the severity of overtourism. Focus interviews were undertaken, and monthly tourist arrival data for 13 years is analysed to gauge the levels of overtourism. Findings The study identifies the factors such as communication gaps, lack of stakeholders’ participation and non-availability of the tourism development plan as the primary reasons for the absence of sustainable overtourism solution. The study finds the extent of overtourism and its adverse effects on Nainital and underlines the need for policy interventions and optimal management of resources. The findings of this study highlight the need for sustainable long-term strategies. Research limitations/implications Overtourism can be understood and analysed in a better way with more granular data level. Practical implications The strategies presented can be applied at the policy level in the small- and mid-sized cities that are on hills or near the waterbody-side and experience mostly day and budget travellers. The understanding of resident–tourist interaction and impacts will help in preparing a better sustainable tourism development plan. The practical strategies of overtourism issues may be implemented for tourism experience and development. Originality/value This study investigates, for the first time, the impact of overtourism and offers strategies for an Indian city. This study will help tourism managers in developing policies for sustainable tourism development of hill cities or waterbody-side in India.

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.

FATCA violation underlies latest US tax and securities fraud charges

2015 ◽  
Vol 16 (1) ◽  
pp. 74-76
Author(s):  
Miriam Fisher ◽  
Brian McManus
Keyword(s):  
Law Enforcement ◽  
Service Providers ◽  
Task Force ◽  
Tax Compliance ◽  
Financial Fraud ◽  
Securities Fraud ◽  
Content Type ◽  
The Impact ◽  
First Time ◽  
Practical Implications

Purpose – To explain the details and implications of a September 9, 2014 federal indictment, US v. Robert Bandfield, the first time a Foreign Account Tax Compliance Act (FATCA) violation has been charged as an “overt act” in furtherance of a tax conspiracy and securities fraud. Design/methodology/approach – Provides background, including the enactment of FATCA and the details of the indictment; describes an undercover investigation conducted by President Obama’s Financial Fraud Enforcement Task Force; and discusses the warnings this indictment sends to the global financial community. Findings – The indictment confirms the coordinated and aggressive tactics US law enforcement is now employing to investigate and prosecute offshore financial fraud. Practical implications – Banks and financial service providers need to be aware of the impact of enhanced US regulatory obligations and implement appropriate compliance measures. These institutions must also remain sensitive to risks presented by unscrupulous customers. Finally, they must be ready to manage appropriately information-gathering and investigatory inquiries originating with US authorities. Originality/value – Practical guidance from experienced tax controversy lawyers.

The storm after the storm: the long-term lingering impacts of hurricanes on schools

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cassandra R. Davis ◽  
Sarah R. Cannon ◽  
Sarah C. Fuller
Keyword(s):  
North Carolina ◽  
Data Collection ◽  
Instructional Time ◽  
Emotional Needs ◽  
Social Emotional ◽  
Content Type ◽  
The North ◽  
State Education ◽  
The Impact

PurposeThe purpose of this paper is to identify and describe the long-term impacts of hurricanes on schools and discuss approaches to improving recovery efforts.Design/methodology/approachInterviews with 20 school districts in Texas and North Carolina after Hurricanes Harvey (2017) and Matthew (2016). In total, 115 interviews were conducted with teachers, principals, district superintendents and representatives from state education agencies. Interview questions focused on the impact of storms and strategies for recovery.FindingsThe authors uncovered three long-term impacts of hurricanes on schools: (1) constrained instructional time, (2) increased social-emotional needs and (3) the need to support educators.Research limitations/implicationsThis paper focuses on two storms, in two states, in two successive years. Data collection occurred in Texas, one academic year after the storm. As compared to the North Carolina, data collection occurred almost two academic years after the storm.Practical implicationsThis paper illuminates strategies for stakeholders to implement and expedite hurricane recovery through; (1) updating curricula plans, (2) providing long-term counselors and (3) supporting educators in and out of school.Originality/valueTo date, very few studies have explored the ways in which schools face long-term impacts following a disaster. This paper provides insight to the challenges that prolong the impacts of disasters and impede recovery in schools. With hurricanes and related disasters continuing to affect schooling communities, more research is needed to identify the best ways to support schools, months to years after an event.

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