Capital Flows and Speculative Attacks in Prospective EU Member States

This paper examines the capital flow experience of transition economies who are also prospective EU members with a view to shedding light on the likely problems they might encounter with exchange rate policy in the run up to euro area membership. We show that they have been experiencing fairly sizeable capital flows since the early 1990s. We explain these flows using two separate models. The first explains the level of capital flows using panel data from the prospective EU members. The second concentrates specifically on estimating the probability of a country experiencing downward speculative pressure. In both cases, the contribution of domestic factors and contagion is explored. The results suggest that while domestic factors have some role to play, it is rather limited. Moreover there is clear evidence of contagion effects, suggesting that macroeconomic policy in the prospective EU members will be complicated by capital flows in the run up to euro area membership.capital flows, transition economies, accession countries and EU membership

The impact of acquisitions on company performance: Evidence from a large panel of UK firms

This paper investigates the impact of acquisitions on company performance using a large panel of UK-quoted companies observed over a long time period. The results indicate that acquisitions have a detrimental impact on company performance and that company growth through acquisition yields a lower rate of return than growth through internal investment. Given the penchant for takeovers in the UK, as witnessed by the record level of takeovers on the London equity market last year, our findings suggest that neither firms nor shareholders are being best served by the existing financial and industrial system

Takeover risk and dividend strategy: A study of UK firms

We investigate the relationship between a company's dividend strategy and its risk of takeover, Our results from a large panel of UK quoted companies suggest that higher dividend payments are associated with a significantly lower conditional probability (hazard) of takeover. Moreover, firms which wish to avoid takeover would be better to distribute the marginal pound 1 of earnings in dividends rather than investing it in the company. We consider two explanations for these findings. We suggest that the presence of an active market for corporate control could encourage firms to raise dividends to maintain shareholder loyalty