Acquisitions of Bankrupt and Distressed Firms

In this paper we focus on acquisitions of bankrupt firms and firms that recently emerged from Chapter 11 and compare these firms with acquired distressed firms to determine whether or not transaction timing plays a role in the outcomes of the mergers. We analyze deal premiums (or lack thereof) and evaluate post-merger operating cash flows to determine whether or not timing of the transactions impacts their effectiveness and success. We also evaluate targets and their acquirers’ stock price reactions to the announcements of acquisitions. We find that distressed targets sell their assets at a premium or at a discount smaller than bankrupt firms do, thereby benefiting from acquisitions more than bankrupt targets—and the announcement day abnormal returns are reflective of the disparity of these purchases with bankrupt firms having significant negative abnormal returns and distressed firms having significant positive announcement day abnormal returns and acquirers of both having material announcement day abnormal returns. We also find that abnormal post-merger cash flow and cumulative abnormal return changes are more pronounced for bankrupt than distressed firms, indicating that acquisitions in Chapter 11 add greater economic value for both target and its acquirer than do acquisitions outside of bankruptcy. We also find post-merger market performance improvements for bankrupt and not distressed firms. In summary, distressed firms get a merger announcement premium and bankrupt firms give it away to their acquirers whose shareholders benefit from acquisition premiums in a year after the mergers

Analyst Ratings for Firms Filing and Reorganizing Under Chapter 11

Purpose The purpose of this paper is to examine analyst followings of firms starting from one year prior to their filing for Chapter 11 and as the firms progress through bankruptcy proceedings with a focus on firms receiving “Hold” or better recommendations. The authors attempt to answer questions such as what the common characteristics of the firms receiving stronger than expected recommendations one year prior to filing for bankruptcy reorganization or while in bankruptcy are, and how the market reacts to the issuance of stronger ratings for those firms. Design/methodology/approach The authors design various regressions and apply them to a total of 2,754 sell-side analyst recommendations and 325 firms that are either approaching bankruptcy filing or in the process of reorganizing. In each analysis, the authors control for several firm and performance characteristics. Findings The authors find that the probability of securing stronger ratings is higher for small firms and for those followed by a greater number of analysts than for large firms and firms followed by fewer analysts. The market becomes more skeptical of optimistic evaluations closer to the date of bankruptcy filing (perhaps reflecting some anticipation) and reacts more positively to rating upgrades issued during bankruptcy protection than to the upgrades issued before the bankruptcy filing. Research limitations/implications The conclusions are based on the analysis of analyst recommendations issued shortly before Chapter 11 filings and during bankruptcy proceedings. The conclusions could be strengthened by further analysis of firms’ post-bankruptcy recovery and performance and examination of analyst recommendations issued for the firms after they emerge from Chapter 11.. Practical implications Analyst security ratings that are more positive than expected are perhaps the result of superior expertise and access to private information. During bankruptcy proceedings, when information disclosure is limited, investors could greatly benefit from reports issued by security analysts. Originality/value This study contributes to the literature in a number of ways. First, the authors contribute to the literature on the analyst ratings of firms in distress by considering the period between bankruptcy filing and emergence, while the existing literature provides analysis of pre-bankruptcy recommendations and forecasts. Second, the authors focus on better than expected ratings rather than all types of ratings as the firms approach bankruptcy filings and proceed through reorganization. Finally, they evaluate how investors react to stronger than expected analyst ratings

What Do Institutional Investors Know and Act on Before Almost Everyone Else: Evidence from Corporate Bankruptcies

We analyze investment behavior of institutional managers who hold and trade shares of firms that file for bankruptcy. We find that during the five-year period preceding a bankruptcy filing, institutional investors (except those managing investment companies) are net buyers with a positive abnormal net number of shares traded during the period. Institutional managers start to sell shares of bankrupt firms sooner in some firms than in others; these earlier sales are of smaller firms with weaker operating performance, and lower equity risk. We do not find evidence that institutional stockholders trade strategically and avoid material price declines before they occur

The Integrity of Financial Analysts: Evidence from Asymmetric Responses to Earnings Surprises

This paper investigates the integrity of financial analysts by examining their recommendation responses to large quarterly earnings surprises. Although there is no significant difference in recommendation changes between affiliated and unaffiliated analysts in response to positive earnings surprises, affiliated analysts are more reluctant than unaffiliated analysts to downgrade stock recommendations in response to negative earnings surprises. The evidence implies that conflicts of interest undermine the integrity of financial analysts. We further examine the effects of reputation concern and the Global Research Analyst Settlement as informal and formal mechanisms, on restoring analysts’ integrity. The results show that the positive bias in recommendations remains prevalent for affiliated analysts from reputable investment banks and for the postreform period. Finally, evidence from market reactions suggests that investors fail to notice that analysts’ integrity is compromised by conflicts of interest and are misled by affiliated analysts

Thermonanomechanics of Graphene Oxide-M13 Bacteriophage Nanocomposites -Towards Graphene-based Nanodevices

The self-assembly of graphene oxide (GO) and M13 bacteriophage results in the formation of micro-porous structures, known as GraPhage13 aerogels (GPA). Given the limited applications of aerogels in industry due to their nanomechanical properties, along with the previously observed temperature-dependent characteristics in graphene-based nanocomposites, a thorough exploration of the thermosensitive nanomechanical properties of GPA is essential. Herein, a comprehensive characterisation of the morphology, composition, and spectroscopic analysis of the GPA for a range of temperatures has been conducted and correlated with its nanomechanical properties. Elevated temperatures have been found to lead to gradual removal of oxygen-containing functional groups (OCFGs) from GPA, resulting in increased structural defects and reduced stiffness. Notably, unique nanomechanical behaviours of GPA have been further identified, where the thermal expansion of sp3 bonds exceeds that of a crystalline sp3 structure, while the thermal contraction of sp2 bonds in GPA is found to be between graphite and GO. This underscores the impact of GO functionalisation on the thermal expansion behaviour of GPA. The obtained insights enhance the overall comprehension of the temperature annealing impact on GPA and highlight the tunability of its nanomechanical properties, showcasing a broad potential of this novel nanocomposite across a diverse range of applications

Glass compositions and tempo of post-17 ka eruptions from the Afar Triangle recorded in sediments from lakes Ashenge and Hayk, Ethiopia

AbstractNumerous volcanoes in the Afar Triangle and adjacent Ethiopian Rift Valley have erupted during the Quaternary, depositing volcanic ash (tephra) horizons that have provided crucial chronology for archaeological sites in eastern Africa. However, late Pleistocene and Holocene tephras have hitherto been largely unstudied and the more recent volcanic history of Ethiopia remains poorly constrained. Here, we use sediments from lakes Ashenge and Hayk (Ethiopian Highlands) to construct the first <17 cal ka BP tephrostratigraphy for the Afar Triangle. The tephra record reveals 21 visible and crypto-tephra layers, and our new database of major and trace element glass compositions will aid the future identification of these tephra layers from proximal to distal locations. Tephra compositions include comendites, pantellerites and minor peraluminous and metaluminous rhyolites. Variable and distinct glass compositions of the tephra layers indicate they may have been erupted from as many as seven volcanoes, most likely located in the Afar Triangle. Between 15.3−1.6 cal. ka BP, explosive eruptions occurred at a return period of <1000 years. The majority of tephras are dated at 7.5−1.6 cal. ka BP, possibly reflecting a peak in regional volcanic activity. These findings demonstrate the potential and necessity for further study to construct a comprehensive tephra framework. Such tephrostratigraphic work will support the understanding of volcanic hazards in this rapidly developing region

Reprint of Glass compositions and tempo of post-17 ka eruptions from the Afar Triangle recorded in sediments from lakes Ashenge and Hayk, Ethiopia

Numerous volcanoes in the Afar Triangle and adjacent Ethiopian Rift Valley have erupted during the Quaternary, depositing volcanic ash (tephra) horizons that have provided crucial chronology for archaeological sites in eastern Africa. However, late Pleistocene and Holocene tephras have hitherto been largely unstudied and the more recent volcanic history of Ethiopia remains poorly constrained. Here, we use sediments from lakes Ashenge and Hayk (Ethiopian Highlands) to construct the first <17 cal ka BP tephrostratigraphy for the Afar Triangle. The tephra record reveals 21 visible and crypto-tephra layers, and our new database of major and trace element glass compositions will aid the future identification of these tephra layers from proximal to distal locations. Tephra compositions include comendites, pantellerites and minor peraluminous and metaluminous rhyolites. Variable and distinct glass compositions of the tephra layers indicate they may have been erupted from as many as seven volcanoes, most likely located in the Afar Triangle. Between 15.3?1.6 cal. ka BP, explosive eruptions occurred at a return period of <1000 years. The majority of tephras are dated at 7.5?1.6 cal. ka BP, possibly reflecting a peak in regional volcanic activity. These findings demonstrate the potential and necessity for further study to construct a comprehensive tephra framework. Such tephrostratigraphic work will support the understanding of volcanic hazards in this rapidly developing regionpublishersversionPeer reviewe

Precision Astrometry of a Sample of Speckle Binaries and Multiples with the Adaptive Optics Facilities at the Hale and Keck II Telescopes

Using the adaptive optics facilities at the 200-in Hale and 10-m Keck II, we observed in the near infrared a sample of 12 binary and multiple stars and one open cluster. We used the near diffraction limited images of these systems to measure the relative separations and position angles between their components. In this paper, we investigate and correct for the influence of the differential chromatic refraction and chip distortions on our relative astrometric measurements. Over one night, we achieve an astrometric precision typically well below 1 miliarcsecond and occasionally as small as 40 microarcseconds. Such a precision is in principle sufficient to astrometrically detect planetary mass objects around the components of nearby binary and multiple stars. Since we have not had sufficiently large data sets for the observed sample of stars to detect planets, we provide the limits to planetary mass objects based on the obtained astrometric precision.Comment: 18 pages, 8 figures, 9 tables, to appear in MNRA

ESO Imaging Survey. The Stellar Catalogue in the Chandra Deep Field South

(abridged) Stellar catalogues in five passbands (UBVRI) over an area of approximately 0.3 deg^2, comprising about 1200 objects, and in seven passbands (UBVRIJK) over approximately 0.1 deg^2, comprising about 400 objects, in the direction of the Chandra Deep Field South are presented. The 90% completeness level of the number counts is reached at approximately U = 23.8, B = 24.0, V = 23.5, R = 23.0, I = 21.0, J = 20.5, K = 19.0. A scheme is presented to select point sources from these catalogues, by combining the SExtractor parameter CLASS_STAR from all available passbands. Probable QSOs and unresolved galaxies are identified by using the previously developed \chi^2-technique (Hatziminaoglou et al 2002), that fits the overall spectral energy distributions to template spectra and determines the best fitting template. The observed number counts, colour-magnitude diagrams, colour-colour diagrams and colour distributions are presented and, to judge the quality of the data, compared to simulations based on the predictions of a Galactic Model convolved with the estimated completeness functions and the error model used to describe the photometric errors of the data. The resulting stellar catalogues and the objects identified as likely QSOs and unresolved galaxies with coordinates, observed magnitudes with errors and assigned spectral types by the $\chi^2$-technique are presented and are publicly available.Comment: Paper as it will appear in print. Complete figures and tables can be obtained from: http://www.eso.org/science/eis/eis_pub/eis_pub.html. Astronomy & Astrophysics, accepted for publicatio