Do Target CEOs Sell Out Their Shareholders to Keep Their Job in a Merger?

CEOs have a potential conflict of interest when their company is acquired: they can bargain to be retained by the acquirer and for private benefits rather than for a higher premium to be paid to the shareholders. We investigate the determinants of target CEO retention by the acquirer and whether target CEO retention affects the premium paid by the acquirer. The probability that a CEO is retained increases with a private bidder, the performance of the target, and with the fraction of target shares held by insiders. Regardless of the bidder type, we find no evidence that the premium paid is lower when the CEO is retained by the acquirer. Strikingly, the target stock price increases more at the announcement of an acquisition by a private firm when the CEO is retained than when she is not. This result holds whether the private acquirer is a private equity firm or an operating company and for management buyouts.

A case study on decentralized manufacturing of 3D printed medicines

Pharmaceutical 3D printing (3DP) is one of the emerging enabling technologies of personalised medicines as it affords the ability to fabricate highly versatile dosage forms. In the past 2 years, national medicines regulatory authorities have held consultations with external stakeholders to adapt regulatory frameworks to embrace point-of-care manufacturing. The proposed concept of decentralized manufacturing (DM) involves the provision of feedstock intermediates (pharma-inks) prepared by pharmaceutical companies to DM sites for manufacturing into the final medicine. In this study, we examine the feasibility of this model, with respect to both manufacturing and quality control. Efavirenz-loaded granulates (0–35%w/w) were produced by a manufacturing partner and shipped to a 3DP site in a different country. Direct powder extrusion (DPE) 3DP was subsequently used to prepare printlets (3D printed tablets), with mass ranging 266–371 mg. All printlets released more than 80% drug load within the first 60 min of the in vitro drug release test. An in-line near-infrared spectroscopy system was used as a process analytical technology (PAT) to quantify the printlets' drug load. Calibration models were developed using partial least squares regression, which showed excellent linearity (R2 = 0.9833) and accuracy (RMSE = 1.0662). Overall, this work is the first to report the use of an in-line NIR system to perform real-time analysis of printlets prepared using pharma-inks produced by a pharmaceutical company. By demonstrating the feasibility of the proposed distribution model through this proof-of-concept study, this work paves the way for investigation of further PAT tools for quality control in 3DP point-of-care manufacturing

Why do large shareholders adopt a short-term versus a long-term investment horizon in different firms?

I ask why the same large shareholders have different investment horizons. Using data for 1998–2013, I examine four fundamental firm policies for their potential influence on blockholders’ investments with different time horizons. The panel ordinary least squares, difference‐in‐difference (using the Sarbanes‐Oxley Act), logistic, and dynamic generalized method of moments regression analyses reveal that blockholders adopt a short‐term horizon in smaller firms with a less independent board, high leverage, and high dividends while the same blockholders keep their investments longer in firms with a more independent board and low dividends. Under various economic conditions, different firm characteristics gain importance in blockholders’ decision on short‐term versus long‐term investments

Factors Impacting Capital Expenditures in the Quick Service Restaurant Industry

The purpose of this article is to study the factors that impact capital expenditures in the quickservice restaurant industry. The authors hypothesize that growth opportunities, free cash flow, size, corporate earnings, economic conditions, and franchising status will have impact on the capital expenditures of quick-service restaurants. This study analyzed capital expenditure and other financial data on quick service restaurants for the period 2006–2016. Results suggest that corporate earnings, size, cash flow, economic conditions, and franchising have a significant relationship with capital expenditures, while growth opportunities are not associated with capital expenditures. Specifically, a high degree of corporate earnings, large size, and a high degree of cash flow tend to be associated with a high degree of capital expenditures; while favorable economic conditions and franchising tend to be associated with a low level of capital expenditures

The shorter the better? A follow-up analysis of 10-session psychiatric treatment including the motive-oriented therapeutic relationship for borderline personality disorder.

There is little research on short-term treatments for borderline personality disorder (BPD). While the core changes may occur only in long-term treatments, short-term treatments may enable the study of early generic processes of engagement in therapy and thus inform about effective treatment components. It was shown that a 10-session version of a psychiatric treatment was effective in reducing borderline symptoms at the end of this treatment [Kramer, U., Kolly, S., Berthoud, L., Keller, S., Preisig, M., Caspar, F., … Despland, J.-N. (2014). Effects of motive-oriented therapeutic relationship in a ten-session general psychiatric treatment for borderline personality disorder: A randomized controlled trial. Psychotherapy and Psychosomatics, 83, 176-186.]. Also, it was demonstrated in a randomized design that adding the motive-oriented therapeutic relationship (MOTR), following an individualized case formulation based on Plan Analysis, further increased general outcome after session 10 and had a positive effect on the early changes in self-esteem and alliance. The present study focuses on the follow-up period after this initial treatment, examining treatment density and outcomes after 6 months and service utilization after 12 months. Outcome was measured using the OQ-45. Results on a sub-sample of N = 40 patients with available OQ-45 data at follow-up (n = 21 for MOTR-treatment, n = 19 for comparison treatment) showed maintenance of gains over the follow-up period, which did not differ between both conditions. It appeared for this sample that MOTR treatments, while using the same number of sessions, lasted more weeks (i.e., lower treatment density, defined as the number of sessions per week), when compared to the treatments without MOTR. Density marginally predicted symptom reduction at follow-up. Patients in MOTR treatments had a greater likelihood of entering structured psychotherapy after the initial sessions than patients in the comparison group. These results are overall consistent with earlier studies on short-term treatments for BPD and underline the importance of individualizing interventions, by using case formulations that rely on idiographic methods and integrative concepts

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

A note on the pricing of multivariate contingent claims under a transformed-gamma distribution

We develop a framework for pricing multivariate European-style contingent claims in a discrete-time economy based on a multivariate transformed-gamma distribution. In our model, each transformed-gamma distributed underlying asset depends on two terms: a idiosyncratic term and a systematic term, where the latter is the same for all underlying assets and has a direct impact on their correlation structure. Given our distributional assumptions and the existence of a representative agent with a standard utility function, we apply equilibrium arguments and provide sufficient conditions for obtaining preference-free contingent claim pricing equations. We illustrate the applicability of our framework by providing examples of preference-free contingent claim pricing models. Multivariate pricing models are of particular interest when payoffs depend on two or more underlying assets, such as crack and crush spread options, options to exchange one asset for another, and options with a stochastic strike price in general