Glamour, value and the post-acquisition performance of acquiring firms

Article Abstract:

Long-horizon bidder performance in acquisitions and mergers was examined in a sample of 3169 mergers and 348 tender offers in firms between January 1980 and December 1991 to account for bidder underperformance and its contributing factors in the long run. The bootstrapping method of Ikenberry (1995) was used to adjust for systematic biases in examining statistical significance while bidder performance results were also subjected to adjustments for book-to-market and firm size effects. Results show value bidding firms to significantly better glamour bidders after the conclusion of the tender offer.

Management Functions, Financial Systems & Controls, Acquisitions and mergers, Management, Book value (Accounting)

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Does stock price elasticity affect corporate financial decisions?

Article Abstract:

Research on how corporate financial decisions are affected by stock price elasticity was conducted. Econometric analysis suggests that companies which prefer the Dutch auction than the fixed price tender offer between 1984 and 1989 are those expecting greater stock elasticity. The expected elasticity has been an important basis of choosing fixed price tender offer. Findings indicate that the elasticity of expected stock price is a significant determinant of financial decisions affecting the supply of and demand for stocks.

Capital Management-Stock Repurchase, Planning, Economic aspects, Stocks, Stock prices, Finance, Financial management, Stock redemption, Elasticity (Economics), Repurchase agreements

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Does the form of compensation matter? Investment banker fee contracts in tender offers

Article Abstract:

An analysis of the relation between investment bankers and their clients is presented. The analysis focuses on fee contracts covered by tender offers and applies data from such offers spanning 1978 to 1986. It is shown that fee contracts are effective in concluding tender offers. However, the method of contracting is only a partial solution for agency problems encountered in investment banker relations.

Investment banks

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