Dot-Com Deals: An Empirical Investigation of Value Creation in Internet Related Acquisitions

Studying the value created by web-related acquisitions is important from at least two perspectives. First, acquisitions have become a popular strategy for corporate growth for firms engaged in e-commerce initiatives. Surprisingly, there is little empirical research examining the viability of acquisitions as a mode of corporate growth. A second reason for studying the linkages between acquisitions and firm value comes from the growing literature on the resource-based theory of firm. According to this view, acquisitions lead to redeployment of resources across the firm, leading to more productive uses of resources and capabilities of the firm. Firm-specific assets and capabilities residing in one organization are merged and combined with those in another organization in an effort to improve the overall productivity of combined resources. This is all the more important in the context of firms engaged in e-commerce initiatives as they are under pressure to gain resources and capabilities before their competitors. For traditional brick and mortar firms as well as Internet firms trying to establish an online presence, acquisitions offer an opportunity to gain quicker access to resources and technological expertise that would accelerate their plans for online expansion. For Internet firms facing intense competition and resource constraints, acquisitions also provide a viable exit strategy, simultaneously satisfying the wealth maximizing objectives of their entrepreneurs. Acquisitions also help in meeting the critical resource requirements faced by several Internet firms that are in the early stages of business development. Evaluating the value created through acquisitions will throw light on the resource synergies that are expected to be generated through the acquisitions

Does founding family control affect earnings management?

Because of concentrated ownership stakes, board composition and longer-investment horizons, founding-family controlled firms provide an interesting setting for examining issues relating to governance and control. Anderson and Reeb (2003a, b, 2004), find that the founding-family controlled structure results in superior stock market and accounting performance and lower cost of debt compared to their nonfamily controlled counterparts. We add to their findings by examining the relationships between founding family control and earnings management. The unique characteristics of family controlled firms could insulate these firms from pressures to manage earnings. Our results support this notion, and find that family firms are significantly less likely to manage earnings.

The price and volume response to earnings announcements in the corporate bond market

We examine abnormal returns and trading activity in bond markets around earnings announcements. Previous work provides mixed evidence on the relative impact of positive and negative surprises and the degree of response in investment-grade and speculative-grade bonds. We find that these announcements convey value-relevant information for both positive and negative earnings surprises in both investment and speculative-grade bonds. We also document significant heterogeneity in the response across industries, with muted responses in both abnormal returns and trading activity for bonds of firms in the financial and utilities industries

Do derivatives affect the use of external financing?

We examine whether derivatives use reduces the utilization of external financing for a large sample of nonfinancial firms over the period 2002 to 2004. Using the measures of net external finance as discussed in Bradshaw et al. (2006), we find a negative association between corporate derivative use and the use of external financing. Further, we find the relationship is driven by differences in the use of debt, as opposed to equity financing. © 2012 Copyright Taylor and Francis Group, LLC

Too busy to show up? An analysis of directors' absences

This study contributes to the debate on the benefits and costs of multiple directorships by investigating the impact of multiple directorships on board meeting attendance. Individuals with multiple board seats (or "busy" directors) exhibit a higher tendency to be absent from board meetings. The results are robust even after controlling for firm-specific characteristics, board of directors structure and endogeneity. Furthermore, our results do not support the hypothesis that directors with higher ownership stakes are more motivated to attend board meetings. Monetary inducements such as board meeting fees and annual director retainers do not appear to enhance attendance. Finally, the enactment of the Sarbanes-Oxley Act (SOX) appears to have a material impact on board attendance.Multiple directorships Meeting attendance Corporate governance