Pub Date : 2012-01-01DOI: 10.1111/j.1467-8683.2011.00878.x
J. Vieito
Manuscript Type: Empirical. Research Question/Issue: This study is among the first to investigate the impact of gender on the relationship between the compensation gap of the CEO and Vice‐Presidents on company performance, testing if companies managed by a female CEO or a male CEO follow tournament or behavioral theory. Tournament theory suggests that a large compensation gap between CEO and company Vice‐Presidents (VPs) leads to higher company performance; behavioral theory states that higher performance may be achieved with a small compensation gap between CEO and VPs. Additionally the study also investigates if companies managed by a female CEO perform better, or not, than those managed by a male CEO, and if the factors that explain the compensation gap between CEO and VPs in these two groups of companies are the same, or not. Data for the investigation emanated from the USA during the period 1992 to 2004. Research Findings/Insights: The results reflect something quite new in the area – on average, companies managed by a female CEO perform better, and have a smaller compensation gap between the CEO and VPs than companies managed by a male CEO. In companies managed by a female CEO, a smaller difference in the total compensation gap between CEO and Vice‐Presidents leads, on average, to higher company performance, however, when the CEO is a male, a higher compensation gap is required to obtain higher company performance. The results provide empirical support that the behavioral theory is predominant in companies managed by a female whereas tournament theory is predominant in companies managed by a male. Theoretical/Academic Implications: The paper fills an important gap in the existing literature by providing econometric evidence that males and females CEOs have a different impact on the relationship between CEO and VPs compensation gap and company performance, and that it is not indifferent to choosing a male or a female CEO in terms of company performance. Practitioner/Policy Implications: This study offers an insight to practitioners and policy makers suggesting that gender influences the relationship between the CEO and Vice‐Presidents compensation gap and company performance. Boards may be able to improve company performance if they limit the compensation gap between CEO and VPs when the CEO is a female and extend it, when it is a male.
{"title":"Gender, Top Management Compensation Gap, and Company Performance: Tournament Versus Behavioral Theory","authors":"J. Vieito","doi":"10.1111/j.1467-8683.2011.00878.x","DOIUrl":"https://doi.org/10.1111/j.1467-8683.2011.00878.x","url":null,"abstract":"Manuscript Type: Empirical. Research Question/Issue: This study is among the first to investigate the impact of gender on the relationship between the compensation gap of the CEO and Vice‐Presidents on company performance, testing if companies managed by a female CEO or a male CEO follow tournament or behavioral theory. Tournament theory suggests that a large compensation gap between CEO and company Vice‐Presidents (VPs) leads to higher company performance; behavioral theory states that higher performance may be achieved with a small compensation gap between CEO and VPs. Additionally the study also investigates if companies managed by a female CEO perform better, or not, than those managed by a male CEO, and if the factors that explain the compensation gap between CEO and VPs in these two groups of companies are the same, or not. Data for the investigation emanated from the USA during the period 1992 to 2004. Research Findings/Insights: The results reflect something quite new in the area – on average, companies managed by a female CEO perform better, and have a smaller compensation gap between the CEO and VPs than companies managed by a male CEO. In companies managed by a female CEO, a smaller difference in the total compensation gap between CEO and Vice‐Presidents leads, on average, to higher company performance, however, when the CEO is a male, a higher compensation gap is required to obtain higher company performance. The results provide empirical support that the behavioral theory is predominant in companies managed by a female whereas tournament theory is predominant in companies managed by a male. Theoretical/Academic Implications: The paper fills an important gap in the existing literature by providing econometric evidence that males and females CEOs have a different impact on the relationship between CEO and VPs compensation gap and company performance, and that it is not indifferent to choosing a male or a female CEO in terms of company performance. Practitioner/Policy Implications: This study offers an insight to practitioners and policy makers suggesting that gender influences the relationship between the CEO and Vice‐Presidents compensation gap and company performance. Boards may be able to improve company performance if they limit the compensation gap between CEO and VPs when the CEO is a female and extend it, when it is a male.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128123526","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2012-01-01DOI: 10.1111/j.1467-8683.2011.00866.x
Alessandro Zattoni, H. van Ees
Manuscript Type: Review. Research Question/Issue: The article starts as a reflection on the criteria that articles submitted to CGIR should respect in order to pass the screening and referee procedures. Beyond that, the article explores the characteristics of all articles, and particularly of best paper and runner up articles, published recently in the journal. As such the article may be a guide for publishing in the journal and for contributing to the development of a global theory of corporate governance. Research Findings/Insights: The article is based on both personal reflections of the two screening editors of the journal, and the analysis of all screening decisions taken in 2009, all articles published in the journal in 2008–10, and best papers and runner up articles in 2007–09. Results shows that (1) the most important reasons for desk rejection are the failure to build the paper on the extant literature addressing international corporate governance, a problematic structure of the paper together with substantial editing problems, and the quality of the data collection procedure; (2) the majority of articles published in the journal use both a legal, finance, and economic theoretical framework, and a quantitative research method to analyze how governance mechanisms control value distribution at firm level; (3) best papers and runner up articles have richer theoretical frameworks, more eclectic research methods, and pay explicit attention to the relevance for theory and practice. Theoretical/Academic Implications: The article emphasizes the importance to balance rigor and relevance to enhance the global understanding of corporate governance. Practitioner/Policy Implications: The results of the study may be of practical importance for the scholars of various disciplines that want to submit articles to the journal. The ideas contained in this article can help them to refine their articles before the submission to increase the rate of acceptance in the review process and hopefully the publication in the journal. Moreover, we underline that moving forward a global theory of corporate governance could assist practitioners and/or policy makers in developing more efficient governance mechanisms.
{"title":"How to Contribute to the Development of a Global Understanding of Corporate Governance? Reflections from Submitted and Published Articles in CGIR","authors":"Alessandro Zattoni, H. van Ees","doi":"10.1111/j.1467-8683.2011.00866.x","DOIUrl":"https://doi.org/10.1111/j.1467-8683.2011.00866.x","url":null,"abstract":"Manuscript Type: Review. Research Question/Issue: The article starts as a reflection on the criteria that articles submitted to CGIR should respect in order to pass the screening and referee procedures. Beyond that, the article explores the characteristics of all articles, and particularly of best paper and runner up articles, published recently in the journal. As such the article may be a guide for publishing in the journal and for contributing to the development of a global theory of corporate governance. Research Findings/Insights: The article is based on both personal reflections of the two screening editors of the journal, and the analysis of all screening decisions taken in 2009, all articles published in the journal in 2008–10, and best papers and runner up articles in 2007–09. Results shows that (1) the most important reasons for desk rejection are the failure to build the paper on the extant literature addressing international corporate governance, a problematic structure of the paper together with substantial editing problems, and the quality of the data collection procedure; (2) the majority of articles published in the journal use both a legal, finance, and economic theoretical framework, and a quantitative research method to analyze how governance mechanisms control value distribution at firm level; (3) best papers and runner up articles have richer theoretical frameworks, more eclectic research methods, and pay explicit attention to the relevance for theory and practice. Theoretical/Academic Implications: The article emphasizes the importance to balance rigor and relevance to enhance the global understanding of corporate governance. Practitioner/Policy Implications: The results of the study may be of practical importance for the scholars of various disciplines that want to submit articles to the journal. The ideas contained in this article can help them to refine their articles before the submission to increase the rate of acceptance in the review process and hopefully the publication in the journal. Moreover, we underline that moving forward a global theory of corporate governance could assist practitioners and/or policy makers in developing more efficient governance mechanisms.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116319875","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Purpose - – Value relevance studies, in particular international comparative studies, use market values sampled at different dates relative to the fiscal year-end. This paper aims to contribute a theoretical and empirical analysis of the relationship between value relevance and the month of market value sampling. Design/methodology/approach - – The paper examines two components of value relevance, coincident relevance and forecast relevance, which the paper develops on the basis of the Ohlson model. The paper measures value relevance by estimating separate panel-data regressions for each of the 12 months around fiscal year-end. The sample consists of companies listed in two continental European countries, France and Germany, over the 1989-2008 period. Findings - – In both country panels, the paper finds that overall value relevance is higher when market value is sampled before or close to fiscal year-end, but incremental value relevance varies between domestic and International Financial Reporting (IFRS) accounting standards. Regression results reveal significant variations in coefficients over the following months of market value in French panel and its IFRS sub-sample only. Research limitations/implications - – The scope of the study is limited to the average value relevance parameters of companies listed on stock exchanges in France and Germany. Future research may be devoted to other countries and study additional determinants of value relevance. Practical implications - – The study shows that the selection of the month of market value sampling can have significant impact on value relevance regression results. Therefore, sensitivity analysis needs to be included in research studies which rely on the value relevance approach. Originality/value - – The paper contributes the first systematic analysis of the variation in value relevance parameters in response to the selection of the month in which market value is sampled.
{"title":"Coincident and Forecast Relevance of Accounting Numbers","authors":"K. Klimczak, Grzegorz Szafrański","doi":"10.2139/ssrn.1610017","DOIUrl":"https://doi.org/10.2139/ssrn.1610017","url":null,"abstract":"Purpose - – Value relevance studies, in particular international comparative studies, use market values sampled at different dates relative to the fiscal year-end. This paper aims to contribute a theoretical and empirical analysis of the relationship between value relevance and the month of market value sampling. Design/methodology/approach - – The paper examines two components of value relevance, coincident relevance and forecast relevance, which the paper develops on the basis of the Ohlson model. The paper measures value relevance by estimating separate panel-data regressions for each of the 12 months around fiscal year-end. The sample consists of companies listed in two continental European countries, France and Germany, over the 1989-2008 period. Findings - – In both country panels, the paper finds that overall value relevance is higher when market value is sampled before or close to fiscal year-end, but incremental value relevance varies between domestic and International Financial Reporting (IFRS) accounting standards. Regression results reveal significant variations in coefficients over the following months of market value in French panel and its IFRS sub-sample only. Research limitations/implications - – The scope of the study is limited to the average value relevance parameters of companies listed on stock exchanges in France and Germany. Future research may be devoted to other countries and study additional determinants of value relevance. Practical implications - – The study shows that the selection of the month of market value sampling can have significant impact on value relevance regression results. Therefore, sensitivity analysis needs to be included in research studies which rely on the value relevance approach. Originality/value - – The paper contributes the first systematic analysis of the variation in value relevance parameters in response to the selection of the month in which market value is sampled.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125051241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine a sample of 1,458 divestitures of domestic assets by U.S. firms to foreign and domestic buyers over the period 1998-2008. Cross-border asset sales yield higher abnormal returns to the seller than domestic sales. This incremental return is driven by liquidity-constrained sellers engaging in cross-border transactions. Larger seller returns in these international deals are associated with favorable economic conditions in foreign buyers’ home markets relative to the U.S. and synergistic gains from U.S. expansion. We also find positive abnormal returns for buyers, albeit smaller than sellers’ returns, but no significant difference between buyer returns in cross-border and domestic transactions.
{"title":"Cross-Border Asset Sales: Shareholder Returns and Liquidity","authors":"Ginka Borisova, Kose John, Valentina Salotti","doi":"10.2139/ssrn.1571729","DOIUrl":"https://doi.org/10.2139/ssrn.1571729","url":null,"abstract":"We examine a sample of 1,458 divestitures of domestic assets by U.S. firms to foreign and domestic buyers over the period 1998-2008. Cross-border asset sales yield higher abnormal returns to the seller than domestic sales. This incremental return is driven by liquidity-constrained sellers engaging in cross-border transactions. Larger seller returns in these international deals are associated with favorable economic conditions in foreign buyers’ home markets relative to the U.S. and synergistic gains from U.S. expansion. We also find positive abnormal returns for buyers, albeit smaller than sellers’ returns, but no significant difference between buyer returns in cross-border and domestic transactions.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"8 3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129867764","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2011-11-01DOI: 10.1016/j.ejor.2011.05.010
Xiangfeng Chen, G. Cai
{"title":"Joint Logistics and Financial Services by a 3PL Firm","authors":"Xiangfeng Chen, G. Cai","doi":"10.1016/j.ejor.2011.05.010","DOIUrl":"https://doi.org/10.1016/j.ejor.2011.05.010","url":null,"abstract":"","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"118538279","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2011-11-01DOI: 10.1111/j.1467-9396.2011.00984.x
Larry D. Qiu, Shengzu Wang
This paper examines a multinational's choice between greenfield investment and cross‐border merger when it enters another country via foreign direct investment (FDI) and faces the host country's FDI policy. Greenfield investment incurs a fixed plant setup cost, whereas the foreign firm obtains only a share of the joint profit from a cross‐border merger under the restriction of the FDI policy. This trade‐off is affected by market demand, cost differential, and market competition, among other things. The host country's government chooses its FDI policy to affect (or alter) the multinational's entry mode to achieve the maximum social welfare for the domestic country. We characterize the conditions shaping the optimal FDI policy and offer intuitions on FDI patterns in developing and developed countries.
{"title":"FDI Policy, Greenfield Investment and Cross‐Border Mergers","authors":"Larry D. Qiu, Shengzu Wang","doi":"10.1111/j.1467-9396.2011.00984.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2011.00984.x","url":null,"abstract":"This paper examines a multinational's choice between greenfield investment and cross‐border merger when it enters another country via foreign direct investment (FDI) and faces the host country's FDI policy. Greenfield investment incurs a fixed plant setup cost, whereas the foreign firm obtains only a share of the joint profit from a cross‐border merger under the restriction of the FDI policy. This trade‐off is affected by market demand, cost differential, and market competition, among other things. The host country's government chooses its FDI policy to affect (or alter) the multinational's entry mode to achieve the maximum social welfare for the domestic country. We characterize the conditions shaping the optimal FDI policy and offer intuitions on FDI patterns in developing and developed countries.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"144 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114672300","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cassandra R. Cole, W. Ferguson, Ryan B. Lee, Kathleen A. McCullough
In today’s global marketplace, the internationalization decision has become increasingly relevant for a greater number of firms. We use the framework of the eclectic paradigm to empirically investigate the decision of U.S. reinsurers to internationalize based on their net exposure in both developed and developing nations. The reinsurance industry poses an interesting setting to study internationalization as we can measure the net exposure in a county given the requirements to report both ceded and assumed reinsurance. This allows for a better measure of the overall exposure reinsurers have in a given country. Of particular interest in exploring internationalization are the diversification benefits as well as the potential impact of free-trade initiatives and the economic development of the host country. We find that the characteristics impacting net reinsurance exposure vary based on the characteristics of the countries.
{"title":"Internationalization of the Reinsurance Industry: An Analysis of the Net Exposure of Reinsurers","authors":"Cassandra R. Cole, W. Ferguson, Ryan B. Lee, Kathleen A. McCullough","doi":"10.2139/ssrn.1121136","DOIUrl":"https://doi.org/10.2139/ssrn.1121136","url":null,"abstract":"In today’s global marketplace, the internationalization decision has become increasingly relevant for a greater number of firms. We use the framework of the eclectic paradigm to empirically investigate the decision of U.S. reinsurers to internationalize based on their net exposure in both developed and developing nations. The reinsurance industry poses an interesting setting to study internationalization as we can measure the net exposure in a county given the requirements to report both ceded and assumed reinsurance. This allows for a better measure of the overall exposure reinsurers have in a given country. Of particular interest in exploring internationalization are the diversification benefits as well as the potential impact of free-trade initiatives and the economic development of the host country. We find that the characteristics impacting net reinsurance exposure vary based on the characteristics of the countries.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"117 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132853726","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper proposes a model where heterogeneous firms choose whether to undertake R&D or not. Innovative firms are more productive, have larger investment opportunities and lower own funds for necessary tangible continuation investments than non-innovating firms. As a result, they are financially constrained while standard firms are not. The efficiency of the financial sector and a country’s institutional quality relating to corporate finance determine the share of R&D intensive firms and their comparative advantage in producing innovative goods. We illustrate how protection, R&D subsidies, and financial sector development improve access to external finance in distinct ways, support the expansion of innovative industries, and boost national welfare. International welfare spillovers depend on the interaction between terms of trade effects and financial frictions and may be positive or negative, depending on foreign countries’ trade position.
{"title":"Innovation, Trade, and Finance","authors":"P. Egger, C. Keuschnigg","doi":"10.1257/MIC.20120032","DOIUrl":"https://doi.org/10.1257/MIC.20120032","url":null,"abstract":"This paper proposes a model where heterogeneous firms choose whether to undertake R&D or not. Innovative firms are more productive, have larger investment opportunities and lower own funds for necessary tangible continuation investments than non-innovating firms. As a result, they are financially constrained while standard firms are not. The efficiency of the financial sector and a country’s institutional quality relating to corporate finance determine the share of R&D intensive firms and their comparative advantage in producing innovative goods. We illustrate how protection, R&D subsidies, and financial sector development improve access to external finance in distinct ways, support the expansion of innovative industries, and boost national welfare. International welfare spillovers depend on the interaction between terms of trade effects and financial frictions and may be positive or negative, depending on foreign countries’ trade position.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"137 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133102299","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this study, we examine the relationship between the structure of financial systems and financial crises. Using cross-country data on financial structures and crises, we find that there is a significant short-term reversal in development of the banking sector and the stock market during both bank crises and market crashes, with the corporate bond market moving in the same direction as bank credit. However, the results are significant for countries with market-based financial systems but not for countries with bank-based financial systems. Emerging markets have mainly bank-based financial systems, which may explain why these markets require more time to recover from economic downturns after a financial crisis. Therefore, we argue that governments should emphasize a balanced financial system structure as it helps countries to recover from financial crises more quickly compared with countries that lack such balanced structures.
{"title":"Financial Crisis, Structure and Reform","authors":"Franklin Allen, Xian Gu, Oskar Kowalewski","doi":"10.2139/ssrn.1802252","DOIUrl":"https://doi.org/10.2139/ssrn.1802252","url":null,"abstract":"In this study, we examine the relationship between the structure of financial systems and financial crises. Using cross-country data on financial structures and crises, we find that there is a significant short-term reversal in development of the banking sector and the stock market during both bank crises and market crashes, with the corporate bond market moving in the same direction as bank credit. However, the results are significant for countries with market-based financial systems but not for countries with bank-based financial systems. Emerging markets have mainly bank-based financial systems, which may explain why these markets require more time to recover from economic downturns after a financial crisis. Therefore, we argue that governments should emphasize a balanced financial system structure as it helps countries to recover from financial crises more quickly compared with countries that lack such balanced structures.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-04-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121084484","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jesse A. Ellis, Sara B. Moeller, Frederik Schlingemann, René M. Stulz
Using a sample of control cross-border acquisitions from 61 countries from 1990 to 2007, we find that acquirers from countries with better governance gain more from such acquisitions and their gains are higher when targets are from countries with worse governance. Other acquirer country characteristics are not consistently related to acquisition gains. For instance, the anti-self-dealing index of the acquirer has opposite associations with acquirer returns depending on whether the acquisition of a public firm is paid for with cash or equity. Strikingly, global effects in acquisition returns are at least as important as acquirer country effects. First, the acquirer's industry and the year of the acquisition explain more of the stock-price reaction than the country of the acquirer. Second, for acquisitions of private firms or subsidiaries, acquirers gain more when acquisition returns are high for acquirers from other countries. We find strong evidence that better alignment of interests between insiders and minority shareholders is associated with greater acquirer returns and weaker evidence that this effect mitigates the adverse impact of poor country governance.
{"title":"Globalization, Governance, and the Returns to Cross-Border Acquisitions","authors":"Jesse A. Ellis, Sara B. Moeller, Frederik Schlingemann, René M. Stulz","doi":"10.2139/ssrn.1734308","DOIUrl":"https://doi.org/10.2139/ssrn.1734308","url":null,"abstract":"Using a sample of control cross-border acquisitions from 61 countries from 1990 to 2007, we find that acquirers from countries with better governance gain more from such acquisitions and their gains are higher when targets are from countries with worse governance. Other acquirer country characteristics are not consistently related to acquisition gains. For instance, the anti-self-dealing index of the acquirer has opposite associations with acquirer returns depending on whether the acquisition of a public firm is paid for with cash or equity. Strikingly, global effects in acquisition returns are at least as important as acquirer country effects. First, the acquirer's industry and the year of the acquisition explain more of the stock-price reaction than the country of the acquirer. Second, for acquisitions of private firms or subsidiaries, acquirers gain more when acquisition returns are high for acquirers from other countries. We find strong evidence that better alignment of interests between insiders and minority shareholders is associated with greater acquirer returns and weaker evidence that this effect mitigates the adverse impact of poor country governance.","PeriodicalId":417524,"journal":{"name":"FEN: Other International Corporate Finance (Topic)","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115199368","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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