The Impact of Acquisitions on Corporate Performance Results During the Period of Economic Slowdown: Case of Lithuania

AbstractAn extensive scientific debate in various countries is inspired over the economic consequences of corporate acquisitions which are executed using different strategies and under different economic conditions. However there is a lack of researches that evaluate corporate acquisitions using different valuation techniques in Lithuania. Therefore in this paper, the impact of corporate acquisitions on profitability ratios and economic value added of the Lithuanian companies during the period of economic slowdown is evaluated. The research sample includes Lithuanian companies, listed at the NASDAQ OMX Vilnius Stock Exchange, which acquired at least one company during the period of 2008 – 2010. The impact of acquisitions is estimated by profitability ratios and economic value added. The research results evidence that both profitability ratios and economic value added decrease during short-term after an acquisition in majority cases. However the recovery can be observed during the last quarter, indicating that acquisitions are beneficial during the economic slowdown

Tax Reform and Corporate Acquisitions

This Article focuses on two tax reform proposals: the Nunn-Domenici bill (USA Tax) and the Armey flat tax. It explores the effect of these two types of tax reform proposals on purchases and sales of corporate businesses. The Article addresses the purchase and sale of only incorporated businesses, and explores the way that the proposed tax systems would operate when applied to these corporate transactions. The author concludes that if these tax proposals became law, it is likely that a large part of tax planning for corporate acquisitions would shift from the federal to the state and local level

MIS Strategies in Corporate Acquisitions

Corporate acquisitions present a particular challenge to managers of information systems. When faced with this situation, IS manager react in a variety of ways. Through a series of case studies and a mailed survey, we identified two MIS acquisition strategies and found some evidence of a third. We also found a marked consistency between the MIS acquisition strategy followed and the overall integration strategy of the firms involved

Corporate Acquisitions and Firm-level Uncertainty: Domestic versus Cross-Border Deals

This paper studies the impact of corporate acquisitions on the uncertainty faced by acquiring firms. We use data for UK public companies from 2004 to 2017 and employ a matching estimator combined with difference-in-differences to control for the endogenous selection of firms into acquiring status. Acquisitions exert a large and persistent effect on the volatility of stock returns of acquirers and is characterized by a pecking order: domestic takeovers lead to a reduction in the uncertainty faced by the acquirer, while cross-border acquisitions|particularly those involving target firms in emerging markets|engender a positive response in acquirers' volatility

Conflicts of Interests Among Shareholders: The Case of Corporate Acquisitions

We identify important conflicts of interests among shareholders and examine their effects on corporate decisions. When a firm is considering an action that affects other firms in its shareholders' portfolios, shareholders with heterogeneous portfolios may disagree about whether to proceed. This effect is measurable and potentially large in the case of corporate acquisitions, where bidder shareholders with holdings in the target want management to maximize a weighted average of both firms' equity values. Empirically, we show that such cross-holdings are large for a significant group of institutional shareholders in the average acquisition and for a majority of institutional shareholders in a significant number of deals. We find evidence that managers consider cross-holdings when identifying potential targets and that they trade off cross-holdings with synergies when selecting them. Overall, we conclude that conflicts of interests among shareholders are sizeable and, at least in the case of acquisitions, affect managerial decisions.