Financing and takeovers

Morellec, Erwan; Zhdanov, Alexei

doi:10.1016/j.jfineco.2007.01.006

Cited by 119 publications

(29 citation statements)

References 51 publications

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“…Extant research provides an extensive set of factors influencing acquirer bids, including imperfect information (Morellec and Zhdanov 2008), simultaneous determination of production and portfolio optimization (Ashton and Atkins 1984), agency costs (Jensen and Meckling 1976), discouragement of competing bids (Fishman 1989), real options frameworks (Hackbarth and Morellec 2008;Morellec and Zhdanov 2008), and international transactions (Madura et al 1991). Eccles et al (1999) identify five types of M&A synergies: cost savings, revenue enhancements, process improvements, financial engineering, and tax benefits.…”

Section: Merger and Acquisition Premiums And Taxationmentioning

confidence: 99%

How Does Transfer Pricing Risk Affect Premiums in Cross‐Border Mergers and Acquisitions?

Mescall

Klassen

2018

Contemporary Accting Res

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This study investigates how transfer pricing risk affects the premiums in cross‐border mergers and acquisitions (M&A). Differences in the rigor of transfer pricing enforcement and the severity and clarity of rules across countries create differential risk of material costs for multinationals as they expand globally. We use 448 country‐level transfer pricing risk assessments by global transfer pricing partners and managers from two firms in 33 countries to develop a metric of country‐year transfer pricing risks. The resulting measure of transfer pricing risk is used to analyze the premiums of 3,103 cross‐border M&A from 2000 to 2012. We find that lower bid premiums are associated with higher transfer pricing risk in the target's country. We find the relation is stronger when expected future transfer pricing benefits are larger. Our results, consistent with the views of experts in the field, provide the first archival evidence that acquirers consider synergies created by future tax planning when estimating the value of a target.

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Section: Merger and Acquisition Premiums And Taxationmentioning

confidence: 99%

How Does Transfer Pricing Risk Affect Premiums in Cross‐Border Mergers and Acquisitions?

Mescall

Klassen

2018

Contemporary Accting Res

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“…6 6 This aspect of the model is related to Clayton and Ravid (2002) and Morellec and Zhdanov (2008), who show that more levered bidders tend to bid less aggressively. The assumption that

ρ < 1 / 2

ensures that program below is concave and that its first‐order condition, that is, , characterizes the global optimum. …”

mentioning

confidence: 99%

Financial Structure, Acquisition Opportunities, and Firm Locations

Almazán¹,

Motta²,

Titman³

et al. 2010

The Journal of Finance

185

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This paper investigates the relation between firms' locations and their corporate finance decisions. We develop a model where being located within an industry cluster increases opportunities to make acquisitions, and to facilitate those acquisitions, firms within clusters maintain more financial slack. Consistent with our model we find that firms located within industry clusters make more acquisitions, and have lower debt ratios and larger cash balances than their industry peers located outside clusters. We also document that firms in high-tech cities and growing cities maintain more financial slack. Overall, the evidence suggests that growth opportunities influence firms' financial decisions. Copyright (c) 2010 the American Finance Association.

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“…Hackbarth and Morellec (2008) use the real option approach to examine merger and disinvestment decisions postmerger and analyze their implications for stock returns. Morellec and Zhdanov (2008) and Tarsalewska (2015) discuss the effects of capital structure on mergers. The stated models include only one source of uncertainty.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Timing and Terms in a Vertical Merger With Two Sources of Uncertainty

Chen

Zhang²,

Lin

2020

J of Financial Research

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In this article we provide the optimal timing and equilibrium terms of a vertical merger with two sources of uncertainty in the production chain, namely, marginal cost of raw material and price level of final product. By eliminating monopoly power and transaction cost in the production process between upstream and downstream firms, a vertical merger can increase social welfare, which is consistent with the literature. The optimal threshold of a vertical merger is negatively correlated with transaction cost in the intermediate product market. Vertical mergers also accelerate when merging provides natural hedging for the postmerger firm, that is, when the correlation between the two uncertainties increases.

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Financing and takeovers

Cited by 119 publications

References 51 publications

How Does Transfer Pricing Risk Affect Premiums in Cross‐Border Mergers and Acquisitions?

How Does Transfer Pricing Risk Affect Premiums in Cross‐Border Mergers and Acquisitions?

Financial Structure, Acquisition Opportunities, and Firm Locations

Optimal Timing and Terms in a Vertical Merger With Two Sources of Uncertainty

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