The paper examines the motivation for termination fee use by proving evidence on the effects of including a target termination fee in a merger contract. I test the implications of the hypothesis that termination fees are used by self-interested target managers to deter competing bids and protect “sweetheart” deals with white knight bidders, presumably resulting in lower premiums for target shar...

We examine completed M&A deals with large bidder shareholder dollar wealth gains at announcement. Our results show that large-gain acquisitions are (i) typically “bolt-on” deals that are small relative to the acquirer’s size; (ii) transaction-specific events (not firmor CEOspecific events); (iii) enhanced by synergies from a strategic fit in the supply chain; and; (iv) executed by bidders with ...

Diatom algae arose by two-step endosymbiosis. The complete genome of the diatom Thalassiosira pseudonana has now been sequenced, allowing us to reconstruct the remarkable intracellular gene transfers that occurred during this convoluted cellular evolution.

In this paper, I begin by describing and assessing the different criteria simple criteria used by financial economists to evaluate merger success. I then discuss the empirical evidence on mergers and acquisitions in the corporate finance literature beginning with stock return studies, moving to accounting-based studies, and finishing with some discussion of clinical studies. Next, I discuss wha...

Mergers and acquisitions can play a transformative role in the evolution of firms and industries and have become an important feature of the US economy, representing about 5% of GDP and 80% of total capital reallocation among large US firms. In this paper, I develop a search-theoretic model of mergers and acquisitions in a dynamic general equilibrium setting and assess the implications for aggr...

Understanding the fundamental mechanisms behind the complex landscape of corporate mergers and acquisitions is of crucial importance to economies across the world. Adapting ideas from the fields of complexity and evolutionary dynamics to analyse business ecosystems, we show here that ancestry, i.e. the cumulative sum of historical mergers across all ancestors, is the key characteristic to compa...

The purpose of the study is to extend further from the result studying overconfidence effects of CEOs on single deal of Malmendier and Tate (2008)’s article to study overconfidence effects of CEOs on multiple mergers and acquisitions. Based on the psychological and financial theories, the likelihood of overconfident CEOs acquiring a company is the net effect of two manifestations of overconfide...

This paper studies the relation between the premiums in takeover bids involving exchange-listed target firms from 1975-91 and the pre-announcement stock price runups. The evidence shows that the pre-bid runup and the postannouncement increase in the target’s stock price (the Amarkup@) are generally uncorrelated. With little substitution between the runup and the markup, the runup is an added co...

Most mergers and acquisitions involve at least four parties with competing interests — acquiring firm shareholders, acquiring firm management, target firm shareholders, and target firm management. We consider the choice between hostile and friendly takeovers in this context and offer an explanation for the prevalence of friendly mergers between large acquirers and small targets. Negotiated merg...

Mergers redraw the boundaries of the firm. In this paper, we relate incomplete contracts to empirical regularities in the market for mergers and acquisitions. We begin by empirically challenging conventional wisdom about mergers and acquisitions: high M/B acquirers typically do not purchase low M/B targets. Instead, mergers typically pair together firms with similar M/B ratios. To show why this...