Investigating the Integration of Acquired Firms in High-technology Industries: Implications for Industrial Policy

Acquisition activity persists despite evidence that acquisitions do not improve firm performance. Further, government policy toward the defense industry has advocated consolidation in the name of nominal cost savings. We explore the role acquisitions play toward technology transfer and begin to identify factors associated with acquisition success through a review of existing research on post-acquisition performance that primarily considers acquiring firm stock performance. Using this research as a foundation, we build a model to analyze post-acquisition performance using a sample of high-technology firms. Results suggest critical success factors associated with post-acquistion stock performance are poorly understood. We conclude that proactive government policy toward high-technology industry mergers and acquisitions may be misguided due to difficulty in predicting acquisition outcome

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

We explore the role of resource interactions in explaining firm performance in the context of acquisitions. Although we confirm that acquisitions do not lead to higher performance on average, we do find that complementary resource profiles in target and acquiring firms are associated with abnormal returns. Specifically, we find that acquiring firm marketing resources and target firm technology resources positively reinforce (complement) each other; meanwhile, acquiring and target firm technology resources negatively reinforce (substitute) one another. Implications for management theory and practice are identified

Target company cross-border effects in acquisitions into the UK

We analyse the abnormal returns to target shareholders in crossborder and domestic acquisitions of UK companies. The crossborder effect during the bid month is small (0.84%), although crossborder targets gain significantly more than domestic targets during the months surrounding the bid. We find no evidence for the level of abnormal returns in crossborder acquisitions to be associated with market access or exchange rate effects, and only limited support for an international diversification effect. However, the crossborder effect appears to be associated with significant payment effects, and there is no significant residual crossborder effect once various bid characteristics are controlled for

Takeover Waves: Triggers, Performance and Motives

This paper reviews the vast academic literature on the market for corporate control.Our main focus is the cyclical wave pattern this market exhibits.From the perspective of takeover waves, we address questions such as: Why do mergers and acquisitions (M&As) occur?Does the ensuing transfer of control generate shareholder gains?What are the main profitability drivers in M&As by takeover wave?We find that the pattern of takeover activity and its profitability significantly vary across the various takeover waves.Despite such diversity, all waves have similarities: they are preceded by technological or industrial shocks, and occur in a positive economic and political environment, amidst rapid credit expansion and stock market booms.Takeovers towards the end of each wave are usually driven by non-rational, frequently selfinterested managerial decision-making.mergers;diversification;takeover waves

Corporate governance and financial constraints on strategic turnarounds

The paper extends the Robbins and Pearce (1992) two-stage turnaround response model to include governance factors. In addition to the retrenchment and recovery, the paper proposes the addition of a realignment stage, referring specifically to the re-alignment of expectations of principal and agent groups. The realignment stage imposes a threshold that must be crossed before the retrenchment and hence recovery stage can be entered. Crossing this threshold is problematic to the extent that the interests of governance-stakeholder groups diverge in a crisis situation. The severity of the crisis impacts on the bases of strategy contingent asset valuation leading to the fragmentation of stakeholder interests. In some cases the consequence may be that management are prevented from carrying out turnarounds by governance constraints. The paper uses a case study to illustrate these dynamics, and like the Robbins and Pearce study, it focuses on the textile industry. A longitudinal approach is used to show the impact of the removal of governance constraints. The empirical evidence suggests that such financial constraints become less serious to the extent that there is a functioning market for corporate control. Building on governance research and turnaround literature, the paper also outlines the general case necessary and sufficient conditions for successful turnarounds

Challenges of Bank Consolidation to the Central Bank of Nigeria: A Descriptive Analysis

Consolidation is one of the trends that characterize banking industry restructuring in Nigeria. However, the emerging scale of bank mergers raises challenging policy questions that must be addressed by policy makers in the course of promoting economic efficiency while safeguarding the nation’s financial system. This paper analyses the challenges of the banking consolidation to the Central Bank of Nigeria (CBN). The paper is descriptive and uses literature survey method. Data was collected from secondary source through CBN publications, local and international journals and other published materials. The paper argues that the recent consolidation poses new challenges to the regulatory authority, particularly in the area of financial system stability. It therefore, recommends that CBN’s policies aimed at providing financial system stability and efficiency should take into consideration the process of banking consolidation and increasing globalisation of financial transactions.Bank Consolidation

The free cash flow theory of takeovers: a financial perspective on mergers and acquisitions and the economy

Consolidation and merger of corporations ; Stock market ; Corporations ; Cash flow

Mergers and Acquisitions in Europe

This paper provides a comprehensive overview of the European takeover market.We characterize the main features of the domestic and cross-border corporate takeovers involving European companies in the period 1993-2001.We provide detailed and comparable information on the size and dynamics of takeover activity in 28 Continental European countries, the UK and Ireland.The data is supplemented with the characteristics of takeover transactions, including the type of takeovers (negotiated acquisition or tender offer), bid attitude (friendly or hostile), payment method (all-cash, all-equity, or mixed deals), legal status of the target firm (public or private), takeover strategy (focus or diversification), amongst other factors.In addition, we investigate the shortterm wealth effects of 2,419 European mergers and acquisitions.We find announcement effects of 9% for target firms compared to a statistically significant announcement effect of only 0.5% for the bidders.Including the price run-up, the share price reaction amounts to 21% for the targets and 0.9% for the bidders.We show that the estimated shareholder wealth effect strongly depends on the different attributes of the takeovers.The type of takeover bid has a large impact on the short-term wealth effects for the target firm shareholders with hostile takeovers triggering substantially larger price reactions than friendly transactions.When a UK target is involved, the abnormal returns are higher than those of bids involving a Continental European target.There is strong evidence that the means of payment has a large impact on the share prices of both bidder and target.takeovers;mergers and acquisitions;diversification;takeover waves;means of payment