[ { "id": "authors:cpx1m-mzc90", "collection": "authors", "collection_id": "cpx1m-mzc90", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190107-082540840", "type": "article", "title": "Improved method for detecting acquirer fixed effects", "author": [ { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Cousin", "given_name": "Jean-Gabriel", "clpid": "Cousin-J-G" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Large merger and acquisition (M&A) samples feature the pervasive presence of repetitive acquirers. They offer an attractive empirical context for revealing the presence of acquirer fixed effects (permanent abnormal performance). But panel data M&A are quite heterogeneous; just a few acquirers undertake many M&As. Does this feature affect statistical inference? To investigate the issue, our study relies on simulations based on real data sets. The results suggest the existence of a bias, confirming suspicions reported in the extant literature about the validity of fixed-effect regression based statistics (R- square, adjusted R- square and fixed effects Fisher tests) used to detect the presence and significance of acquirer fixed effects. We introduce a new resampling method to detect acquirer fixed effects with attractive statistical properties (size and power) for samples of acquirers that complete at least five acquisitions. The proposed method confirms the presence of acquirer fixed effects but only for a marginal fraction of the acquirer population. This result is robust to endogenous attrition and varying time periods between successive transactions.", "doi": "10.1016/j.jempfin.2018.12.003", "issn": "0927-5398", "publisher": "Elsevier", "publication": "Journal of Empirical Finance", "publication_date": "2019-01", "volume": "50", "pages": "20-42" }, { "id": "authors:02dpm-3hd57", "collection": "authors", "collection_id": "02dpm-3hd57", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20180822-105611868", "type": "article", "title": "Empirical Evidence of Overbidding in M&A Contests", "author": [ { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Cousin", "given_name": "Jean-Gabriel", "clpid": "Cousin-J-G" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Surprisingly few papers have attempted to develop a direct empirical test for overbidding in merger and acquisition contests. We develop such a test grounded on a necessary condition for profit-maximizing bidding behavior. The test is not subject to endogeneity concerns. Our results strongly support the existence of overbidding. We provide evidence that overbidding is related to conflicts of interest, but also some indirect evidence that it arises from failing to fully account for the winner's curse.", "doi": "10.1017/S0022109018000273", "issn": "0022-1090", "publisher": "Cambridge University Press", "publication": "Journal of Financial and Quantitative Analysis", "publication_date": "2018-08", "series_number": "4", "volume": "53", "issue": "4", "pages": "1547-1579" }, { "id": "authors:da6k7-0yp58", "collection": "authors", "collection_id": "da6k7-0yp58", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20180321-105712130", "type": "article", "title": "Full-Stock-Payment Marginalization in Merger and Acquisition Transactions", "author": [ { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Cousin", "given_name": "Jean-Gabriel", "clpid": "Cousin-J-G" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "The number of merger and acquisition (M&A) transactions paid fully in stock in the U.S. market declined sharply after 2001, when pooling and goodwill amortization were abolished by the Financial Accounting Standards Board. Did this accounting rule change really have such far reaching implications? Using a difference-in-differences test and Canada as a counterfactual, this study reveals that it did. We also report several other results confirming the role of pooling abolishment, including (i) that the decrease in full stock payment relates to CEO incentives and (ii) that previously documented determinants of the M&A mode of payment cannot explain the post-pooling abolishment pattern. These results are also robust to controls for various factors, such as the Internet bubble, the exclusion of cross-border deals, the presence of Canadian cross-listed firms, the use of a constant sample of acquirers across the pooling and post-pooling abolishment periods, the use of Europe as an alternative counterfactual, and controls for the SEC Rule 10b-18 share repurchase safe harbor amendments of 2003.", "doi": "10.1287/mnsc.2016.2635", "issn": "0025-1909", "publisher": "INFORMS", "publication": "Management Science", "publication_date": "2018-02", "series_number": "2", "volume": "64", "issue": "2", "pages": "760-783" }, { "id": "authors:7znxn-89p40", "collection": "authors", "collection_id": "7znxn-89p40", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20160512-090418124", "type": "article", "title": "CEO Narcissism and the Takeover Process: From Private Initiation to Deal Completion", "author": [ { "family_name": "Aktas", "given_name": "Nihat", "clpid": "Aktas-N" }, { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Bollaert", "given_name": "Helen", "clpid": "Bollaert-H" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Chief executive officer (CEO) narcissism affects the takeover process. Acquirer shareholders react less favorably to a takeover announcement when the target CEO is more narcissistic. Narcissistic acquiring CEOs negotiate faster. They are also marginally more likely to initiate deals. Acquirer CEO narcissism and target CEO narcissism are associated with a lower probability of deal completion and reduce the likelihood that the target CEO will be employed by the merged firm. Our findings highlight the importance of both acquirer and target CEO psychological characteristics throughout the takeover process.", "doi": "10.1017/S0022109016000065", "issn": "0022-1090", "publisher": "Cambridge University Press", "publication": "Journal of Financial and Quantitative Analysis", "publication_date": "2016-02", "series_number": "1", "volume": "51", "issue": "1", "pages": "113-137" }, { "id": "authors:nygqg-d7f06", "collection": "authors", "collection_id": "nygqg-d7f06", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190430-114941824", "type": "article", "title": "Learning from repetitive acquisitions: Evidence from the time between deals", "author": [ { "family_name": "Aktas", "given_name": "Nihat", "clpid": "Aktas-N" }, { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Knowledge gleaned from previous acquisitions may confer valuation expertise and other benefits. But numerous acquisitions also entail costs, due to problems of incorporating diverse units into an ever larger firm. Such benefits and costs are not directly observable from outside the firm. This article proposes a simple model to infer their relative importance, using the time between successive deals. The data requirements are minimal and allow the use of all mergers and acquisitions during 1992\u20132009 (more than 300,000 deals). The results provide evidence of learning gains through repetitive acquisitions, especially under CEO continuity and when successive deals are more similar.", "doi": "10.1016/j.jfineco.2012.10.010", "issn": "0304-405X", "publisher": "Elsevier", "publication": "Journal of Financial Economics", "publication_date": "2013-04", "series_number": "1", "volume": "108", "issue": "1", "pages": "99-117" }, { "id": "authors:y0kre-tyy67", "collection": "authors", "collection_id": "y0kre-tyy67", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190430-072342194", "type": "article", "title": "MicroHoo: Deal failure, industry rivalry, and sources of overbidding", "author": [ { "family_name": "Aktas", "given_name": "Nihat", "clpid": "Aktas-N" }, { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "On February 1, 2008, Microsoft offered $43.7 billion for Yahoo. This offer was a milestone in the battle between Microsoft and Google to control the Internet search industry. The announcement accompanied a substantial decrease in Microsoft's stock price. Investors apparently considered the bid too high and doubted Microsoft's ability to create value with Yahoo's assets (the announcement combined returns implied a total value destruction of $13.29 billion). Using the abnormal returns pattern of industry firms and customers, this article examines the sources of overbidding. Our analyses indicate that Microsoft's aggressive move is rooted in its rivalry with Google, but the personality traits of the involved CEOs might explain also a portion of the overbidding.", "doi": "10.1016/j.jcorpfin.2012.09.006", "issn": "0929-1199", "publisher": "Elsevier", "publication": "Journal of Corporate Finance", "publication_date": "2013-02", "volume": "19", "pages": "20-35" }, { "id": "authors:0st3a-r6494", "collection": "authors", "collection_id": "0st3a-r6494", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190501-083835069", "type": "article", "title": "Serial acquirer bidding: An empirical test of the learning hypothesis", "author": [ { "family_name": "Aktas", "given_name": "Nihat", "clpid": "Aktas-N" }, { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Recent academic studies indicate that acquirers' cumulative abnormal returns (CAR) decline from deal to deal in acquisition programs. Does this pattern suggest hubristic CEO behaviors are significant enough to influence average CAR patterns during acquisition programs? An alternative explanation is CEO learning. This study therefore tests for learning using successive acquisitions of large U.S. public targets undertaken by U.S. acquirers. A dynamic framework reveals that both rational and hubristic CEOs take on average investor reactions to their previous deals into account and adjust their bidding behavior accordingly. These results are consistent with a learning hypothesis.", "doi": "10.1016/j.jcorpfin.2010.07.002", "issn": "0929-1199", "publisher": "Elsevier", "publication": "Journal of Corporate Finance", "publication_date": "2011-02", "series_number": "1", "volume": "17", "issue": "1", "pages": "18-32" }, { "id": "authors:vs6v9-mf854", "collection": "authors", "collection_id": "vs6v9-mf854", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190502-160315019", "type": "article", "title": "Negotiations under the threat of an auction", "author": [ { "family_name": "Aktas", "given_name": "Nihat", "clpid": "Aktas-N" }, { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Many takeovers occur after one-on-one negotiations, which suggests a troubling lack of competition. We seek to determine whether acquirers in such friendly deals are truly insulated from competitive pressures. We study two countervailing influences: (1) potential but unobserved latent competition, i.e., the likelihood that rival bidders could appear, and (2) anticipated auction costs when negotiations fail. Using various proxies, we find that latent competition increases the bid premium offered in negotiated deals and that auction costs reduce the premium.", "doi": "10.1016/j.jfineco.2010.06.002", "issn": "0304-405X", "publisher": "Elsevier", "publication": "Journal of Financial Economics", "publication_date": "2010-11", "series_number": "2", "volume": "98", "issue": "2", "pages": "241-255" }, { "id": "authors:p6faf-hkt77", "collection": "authors", "collection_id": "p6faf-hkt77", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190502-140153393", "type": "article", "title": "Learning, hubris and corporate serial acquisitions", "author": [ { "family_name": "Aktas", "given_name": "Nihat", "clpid": "Aktas-N" }, { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Recent empirical research has shown that, from deal to deal, serial acquirers' cumulative abnormal returns (CAR) are declining. This has been most often attributed to CEOs hubris. We question this interpretation. Our theoretical analysis shows that (i) a declining CAR from deal to deal is not sufficient to reveal the presence of hubris, (ii) if CEOs are learning, economically motivated and rational, a declining CAR from deal to deal should be observed, (iii) predictions can be derived about the impact of learning and hubris on the time between successive deals and, finally, (iv) predictions about the CAR and about the time between successive deal trends lead to testable empirical hypotheses.", "doi": "10.1016/j.jcorpfin.2009.01.006", "issn": "0929-1199", "publisher": "Elsevier", "publication": "Journal of Corporate Finance", "publication_date": "2009-12", "series_number": "5", "volume": "15", "issue": "5", "pages": "543-561" }, { "id": "authors:5k3ba-59948", "collection": "authors", "collection_id": "5k3ba-59948", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190506-160356840", "type": "article", "title": "Is European M&A Regulation Protectionist?", "author": [ { "family_name": "Aktas", "given_name": "Nihat", "clpid": "Aktas-N" }, { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Why do regulatory authorities scrutinise mergers and acquisitions? The authorities themselves claim to be combating monopoly power and protecting consumers. But the last two decades of empirical research has found little supporting evidence for such motives. An alternative is that M&A regulation is actually designed to protect privileged firms. We provide a test of protectionism by studying whether European regulatory intervention is more likely when European firms are harmed by increased competition. Our findings raise a suspicion of protectionist motivations by the European regulator during the 1990s. The results are robust to many statistical difficulties, including endogeneity between investor valuations and regulatory actions.", "doi": "10.1111/j.1468-0297.2007.02068.x", "issn": "0013-0133", "publisher": "Royal Economic Society", "publication": "Economic Journal", "publication_date": "2007-07", "series_number": "522", "volume": "117", "issue": "522", "pages": "1096-1121" }, { "id": "authors:rda4t-n8x36", "collection": "authors", "collection_id": "rda4t-n8x36", "cite_using_url": "https://resolver.caltech.edu/CaltechAUTHORS:20190506-153059185", "type": "article", "title": "Market Response to European Regulation of Business Combinations", "author": [ { "family_name": "Aktas", "given_name": "Nihat", "clpid": "Aktas-N" }, { "family_name": "de Bodt", "given_name": "Eric", "clpid": "de-Bodt-E" }, { "family_name": "Roll", "given_name": "Richard", "clpid": "Roll-R" } ], "abstract": "Acquisitions, mergers, and other business agreements face increasing regulatory scrutiny, even when they involve firms domiciled outside the territory of regulatory authorities. Recent examples include mergers between American firms that were approved by American regulators but blocked by European regulators. Regulatory reciprocity seems a likely future trend. There are obvious consequences for the successful completion of future business combinations. This paper explains the regulatory procedures of the European Commission with respect to business combinations, documents the price reactions of subject firms on dates from the initial announcement to the final regulatory decision, and studies whether European regulators tend to shield European firms from foreign competition. Our main results are: i) the market clearly reacts to European regulatory intervention even when the subject firms are non-European, ii) the probability of intervention is not related to the nationality of the bidder, however, iii) when intervention does occur, the market anticipates it will be more costly when the bidder is non-European, so protectionism cannot be rejected outright, and iv) regulatory interventions are anticipated by investors, so they affect the initial announcement returns.", "doi": "10.1017/S0022109000003197", "issn": "0022-1090", "publisher": "University of Washington School of Business Administration", "publication": "Journal of Financial and Quantitative Analysis", "publication_date": "2004-12", "series_number": "4", "volume": "39", "issue": "4", "pages": "731-757" } ]