We study mergers in a duopoly with differentiated products and noisy observations of firms’ actions. Firms select dynamically optimal actions that are not static best responses and merger incentives arise endogenously when firms sufficiently deviate from their collusive actions. The incentive to merge trades off the gains from avoiding price wars against the gains from a monopoly net of the fix...

We investigate whether controlling shareholders expropriate corporate resources during a financial crisis using the data of Thai firms. Our results are consistent with the argument of Friedman, Johnson, and Mitton (2003) that the propensity to tunnel and prop is higher for business groups in particular if they are organized in pyramids. Specifically, we find that firms that belong to the top 30...

The ownership structures of firms are endogenous. This makes it difficult to produce w direct evidence on the Berle and Means Berle, A.A., Means, G.C., 1932. The Modern x Corporation and Private Property, New York. hypothesis that corporate governance becomes less efficient as the degree of separation of ownership and control increases. We address this issue by studying Austrian cooperative ban...

We document, describe and interpret changes in New Zealand corporate board characteristics between 1995 and 2010, a period centred around the 2003 introduction of the NZX Corporate Governance Best Practice Code. Unsurprisingly, the representation of non-executive, independent and female directors on NZ boards rose during the period, as did real chair and director fees and the importance of boar...

The paper shows that variables commonly used in takeover prediction models also help to explain the likelihood of several other restructuring events, including divestitures, bankruptcies and significant employee layoffs. This finding helps to explain the larger misclassification errors in binomial takeover prediction models commonly used in prior research. The results show that modelling takeov...

This paper investigates the effects of focus versus diversification on bank performance using data on Chinese banks during the 1996-2006 period. We construct a new measure, economies of diversification, and compare the results to those of the more conventional focus index, which is based on the sum of squares of shares in different products or regions. Diversification is captured in four dimens...

Article history: Received 3 September 2008 Accepted 3 September 2008 Available online 9 September 2008 This paper is writtenwith two goals inmind. The first is to offer a critical discussion of papers by Bauguess, Moeller, Schlingemann, and Zutter [Bauguess, Scott, Moeller, Sara, Schlingemann, Frederich and Zutter, Chad, 2009. Ownership structure and target returns. Journal of Corporate Finance...

This paper investigates the relation between investment analyst recommendations and merger completion. Unlike the new issues market, we argue analysts’ incentives are skewed to issue recommendations that ensure merger completion rather than maximize the overall deal value. Using a comprehensive sample of completed and withdrawn mergers, we observe the direction and affiliation of recommendation...

In this paper we examine whether variation in investors’ demand for risky assets is associated with recoveries on defaulted debt securities. Our examination is motivated by the prediction of standard portfolio separation theorems that an increase in aggregate investor risk aversion is associated with a decrease in the demand for the market portfolio of risky assets. Motivated by this prediction...

Article history: Received 1 August 2012 Received in revised form 26 September 2013 Accepted 3 November 2013 Available online xxxx While stock options are commonly used in managerial compensation to provide desirable incentives, they can create adverse incentives to distort the choice of investment risk. Relative to the risk level that maximizes firm value, call options in a compensation contrac...