The relation between private equity takeovers and takeover premiums

The relation between acquisitions and takeover premiums has been extensively documented in the academic literature to date, but these studies have focused on settings whereby the takeover or merger is initiated by a market place competitor. Few studies have extensively focused on private equity takeovers, a unique phenomenon that institutional markets are currently experiencing, and which provides a new setting to understand the composition and structure of takeover premiums. The objective of this study is to provide detailed evidence on the takeover premium offered by private equity in terms of the costs of corporate governance and costs of internal compliance [especially in the light of the implementation of the Sarbanes-Oxley Act (2002)], the role of leverage to increase returns and reduce free cash flow wastage, as well as changes in the senior management team of the target firm. Using a sample of 110 private equity transactions in the United States for the period 2003 2007, the key findings are that certain public firms exhibit greater costs of compliance, indicating that the implementation of SOX imposes significant net costs that can be removed through a firms privatisation by private equity. The findings also demonstrate that excessive managerial remuneration plays an important role in dictating the magnitude of the takeover premiums offered. Finally, this study also provides support to prior literature by illustrating that benefits can be gained by acquiring firms with low levels of debt

How do analysts forecast earnings?

This paper examines the question of how analysts forecast earnings. We examine the determinants of analysts forecasts of both short and long run earnings. The paper is motivated by the importance of analyst forecasts as proxies for expected earnings, which is accompanied by a large literature on the properties of analysts forecast errors but limited evidence on the first order effecthow analysts produce the earnings forecasts. There is an implicit assumption permeating the analyst forecast literature that analysts use the fundamental analysis based forecasting frameworks laid out in the leading business valuation texts. These forecasting frameworks evaluate a firms future prospects in terms of sets of factors relating to the firms industry, strategy, and financial information. Prior studies generally assume the analysts use this business analysis framework for forecasting. The contribution of this study is to explicitly test this proposition. For 28,261, 21,051 and 25,053 US firm-year observations for analysts 1 and 2 year ahead forecasts and long run EPS forecasts, our key findings suggest that analysts anchor on historical EPS to forecast short and long run EPS consistent with the recommendations in the business analysis frameworks. However, inconsistent with the recommended fundamental analysis frameworks, our results suggest that analysts use the forecasting framework only in the long run, to obtain a long-run growth rate to apply to the historical EPS reported by management. Overall, the results suggest that analysts believe their best EPS forecast is the current historical EPS reported by management

Powerful CEOs, cash bonus contracts and firm performance

© 2019 John Wiley & Sons Ltd We investigate whether powerful chief executive officers (CEOs) influence the conditions of their cash bonus contracts. Specifically, we examine (i) the association between CEO power and the proportion of ex-ante cash bonus to base salary (bonus ratio), (ii) the association between CEO power and the relative use of non-financial to financial performance targets in cash bonus contracts, and (iii) the performance consequences of incorporating non-financial targets in cash bonus contracts. Results show that powerful CEOs are associated with greater ex-ante bonus ratios and higher proportions of non-financial performance targets compared to less powerful CEOs. Furthermore, the use of quantitative and corporate social responsibility (CSR)-related non-financial performance targets is positively associated with subsequent firm performance, and the use of undefined non-financial performance targets is negatively associated with subsequent firm performance. These results are robust to alternative econometric specifications and variable definitions

BCL10 is rarely mutated in human prostate carcinoma, small-cell lung cancer, head and neck tumours, renal carcinoma and sarcomas

We have used single-strand conformation polymorphism (SSCP) analysis to screen for mutations in the BCL 10 gene in 81 primary prostate carcinomas, 20 squamous cell cancers of the head and neck, 15 small-cell lung cancer cell lines, 24 renal carcinoma cell lines and 13 sarcoma cell lines. We failed to find evidence of somatically acquired mutations of the BCL10 gene suggesting that BCL 10 does not play a major role in the development of these malignancies

An analysis of the deinstitutionalization of inflation-adjusted accounting practices in Brazilian companies

This article aims to analyze the deinstitutionalization of the inflation-adjustment accounting practices used by large Brazilian companies. The theoretical assumptions used were based on institutional theory, which provides a sociological interpretation of human behavior that recognizes the phenomenon of limited rationality and the political character of social action. Analyses were based on the empirical approach that was proposed by Oliver (1992). The research strategy consisted of questionnaires and interviews conducted in a population of 118 large Brazilian companies from Exame Magazine's list of the 500 largest companies. The primary respondents were accountants and controllers. Factor analysis, one-way ANOVA and the Kruskal-Wallis test were conducted using the approach proposed by Oliver (1992), and the research included 22 variables comprising 12 constructs and 6 qualitative hypotheses regarding the pressures that motivate the deinstitutionalization of inflation-adjusted accounting practices. Therefore, with regard to the constructs assessed, emphasis was placed on identifying the political pressures (the environment) and the functional pressures in both the organizational and environmental dimensions. However, the social pressures did not prove to be significant. We conclude that the process of deinstitutionalization results from a distinct combination of institutional factors, and these results are consistent with the findings from research conducted in the US market and in the UK

Genomic profiling using array comparative genomic hybridization define distinct subtypes of diffuse large b-cell lymphoma: a review of the literature

Diffuse large B-cell lymphoma (DLBCL) is the most common type of non-Hodgkin Lymphoma comprising of greater than 30% of adult non-Hodgkin Lymphomas. DLBCL represents a diverse set of lymphomas, defined as diffuse proliferation of large B lymphoid cells. Numerous cytogenetic studies including karyotypes and fluorescent in situ hybridization (FISH), as well as morphological, biological, clinical, microarray and sequencing technologies have attempted to categorize DLBCL into morphological variants, molecular and immunophenotypic subgroups, as well as distinct disease entities. Despite such efforts, most lymphoma remains undistinguishable and falls into DLBCL, not otherwise specified (DLBCL-NOS). The advent of microarray-based studies (chromosome, RNA, gene expression, etc) has provided a plethora of high-resolution data that could potentially facilitate the finer classification of DLBCL. This review covers the microarray data currently published for DLBCL. We will focus on these types of data; 1) array based CGH; 2) classical CGH; and 3) gene expression profiling studies. The aims of this review were three-fold: (1) to catalog chromosome loci that are present in at least 20% or more of distinct DLBCL subtypes; a detailed list of gains and losses for different subtypes was generated in a table form to illustrate specific chromosome loci affected in selected subtypes; (2) to determine common and distinct copy number alterations among the different subtypes and based on this information, characteristic and similar chromosome loci for the different subtypes were depicted in two separate chromosome ideograms; and, (3) to list re-classified subtypes and those that remained indistinguishable after review of the microarray data. To the best of our knowledge, this is the first effort to compile and review available literatures on microarray analysis data and their practical utility in classifying DLBCL subtypes. Although conventional cytogenetic methods such as Karyotypes and FISH have played a major role in classification schemes of lymphomas, better classification models are clearly needed to further understanding the biology, disease outcome and therapeutic management of DLBCL. In summary, microarray data reviewed here can provide better subtype specific classifications models for DLBCL

Epstein-Barr virus–associated lymphoproliferative disorders

Epstein-Barr virus (EBV) is a member of the human herpesvirus family that was initially isolated from a cultured Burkitt lymphoma cell line by Epstein et al in 1964. Subsequent studies have proven that it is the causative agent in most cases of infectious mononucleosis. Primary infection is usually asymptomatic in childhood; but in adulthood, it is associated with a self-limiting infectious mononucleosis syndrome in approximately one third of the cases. EBV has been linked to many human neoplasms including hematopoietic, epithelial, and mesenchymal tumors. In this review, we will only discuss the EBV-associated lymphoproliferative disorders, dividing them into B-cell, T/NK-cell, and HIV-related lymphoproliferative disorders