We study shareholder returns for firms that acquired five or more public, private, and0or subsidiary targets within a short time period. Since the same bidder chooses different types of targets and methods of payment, any variation in returns must be due to the characteristics of the target and the bid. Results indicate bidder shareholders gain when buying a private firm or subsidiary but lose when purchasing a public firm. Further, the return is greater the larger the target and if the bidder offers stock. These results are consistent with a liquidity discount, and tax and control effects in this market. Takeovers are one of the most important events in corporate finance, both for a firm and the economy. Extensive research has shown that shareholders in target firms gain significantly and that wealth is created at the announcement of takeovers ~i.e., combined bidder and target returns are positive!. However, we know much less about the effects of takeovers on the shareholders of acquiring firms. Evidence suggests that these shareholders earn,

We find evidence of “local bias ” in the acquisition decisions of U.S public firms. Over the period 1990-2003, 18.8 % transactions were local, where the acquirer and the target are within 100 kms of each other. The expected probability that a target would be acquired by a public firm that operates in the same industry and is located within 100 kms is, however, only 6.2 percent. Further, acquirer returns in local transaction are a significant 56 % higher than that in non-local transactions. Our results also suggest that, information, rather than synergies, is more likely to be behind the superior performance of local acquirers. We add a new dimension – geography – to explain cross-sectional variation in acquirer returns.

Acquiring-firm shareholders lost 12 cents at the announcement of acquisitions for every dollar spent on acquisitions for a total loss of $240 billion from 1998 through 2001, whereas they lost $7 billion in all of the 1980s, or 1.6 cents per dollar spent. Though the announcement losses to acquiring-firm shareholders in the 1980s are more than offset by gains to acquired-firm shareholders, the losses of bidders exceed the gains of targets from 1998 through 2001 by $134 billion. The 1998-2001 aggregate dollar loss of acquiring-firm shareholders is so large because of a small number of acquisition announcements by firms with extremely high valuations. Without these announcements, the wealth of acquiring-firm shareholders would have increased. The large losses are consistent with the existence of negative synergies from the acquisitions, but the size of the losses in relation to the consideration paid for the acquisitions is large enough that part of the losses most likely results from investors reassessing the standalone value of the bidders. Firms that announce acquisitions with large dollar losses perform poorly afterwards.

We examine the cumulative abnormal returns to U.S. targets, foreign acquirers, and the portfolio of target and acquirer for 181 successful cross-border tender offers over the period 1982 to 1991. We document that the incentive mechanisms and mitigation of agency costs created by the rule of law and the degree of shareholder and creditor rights protection in the acquiring firm country, as proposed by La Porta, Lopezde-Silanes, Schleifer and Vishny (LLSV) (1998, 2002), explains the observed variation in target, acquirer, and portfolio returns. We also find that foreign acquirers overpay for Delaware-incorporated targets. Our results are strengthened after controlling for factors addressed in the traditional mergers and cross-border investment literature.

I provide a synthesis of the Behavioural finance literature over the past two decades. I review the literature in three parts, namely, (i) empirical and theoretical analyses of patterns in the cross-section of average stock returns, (ii) studies on trading activity, and (iii) research in corporate finance. Behavioural finance is an exciting new field because it presents a number of normative implications for both individual investors and CEOs. The papers reviewed here allow us to learn more about these specific implications.

I provide a synthesis of the behavioral finance literature over the past two decades. I review the literature in three parts, namely, (i) empirical and theoretical analyses of patterns in the cross-section of average stock returns, (ii) studies on trading activity, and (iii) research in corporate finance. Behavioral finance is an exciting new field because it presents a number of normative implications for both individual investors and CEOs. The papers reviewed here allow us to learn more about these specific implications.

We examine the characteristics of the sixth merger wave that started in 2003 and came to an end approximately in late-2007. The drivers of this wave lie primarily in the availability of abundant liquidity, in line with neoclassical explanations of merger waves. Acquirers were less overvalued relative to targets and merger proposals comprised higher cash elements. Moreover, the market for corporate control was less competitive, acquirers were less acquisitive, managers displayed less over-optimism and offers involved significantly lower premiums, indicating more cautious and rational acquisition decisions. Strikingly however, deals destroyed at least as much value for acquiring shareholders as in the 1990s.

this article, we also use results from the literature on limited dependent variables to derive consistent estimators in event studies. However, we focus on the coefficients of cross-sectional regressions for an event that satisfies the maintained hypotheses in models of limited dependent variables. These cross-sectional estimators measure the magnitude of abnormal stock returns around the announcement of a voluntary economic event in the presence of truncation bias. The estimators are then applied to a model of horizontal mergers. The application has been selected for three reasons. First, mergers are plausibly both discrete and nonrepetitive events, and corporate insiders can reasonably be assumed to maximize their stock's true value, conditional on their private information, rather than its market value, as determined by public information

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1 st draft We examine the magnitude and determinants of acquiring shareholder returns using a sample of domestic and foreign acquisitions of UK firms during the period 1990-1998. We also assess the magnitude of combined wealth gains and their division using a paired sample of 219 targets and their acquirers. Targets of foreign bids have a lower PE ratio, have experienced lower sales growth and lower profitability growth but have greater cash reserves and higher R&D intensity vis a vis targets of domestic bids. Foreign acquirers are larger and have a higher level of intangible assets and R&D expenditure vis-à-vis UK bidders. Both targets of foreign bids and their acquirers differ to their domestic counterparts in that they are from more high tech industries. UK acquirers gain albeit insignificantly upon the takeover announcement being made in contrast to the small losses experienced by their foreign counterparts with US acquirers deem to fare worst. Combined wealth gains whilst on average are small, are larger when acquirers are from Continental Europe and when acquirers do not have a previous presence in the UK market. The determinants of acquirers value changes are found to include a mix of both target firms financial characteristics as well as bid features. Finally, a great volume of merger activity is witnessed in the 1995-1998 era compared to the 1990-94 period and we control for this in our analyses. Principal author: