Is more less? Propensity to diversify via M&A and market reactions

Corporate diversification, refocusing and shareholder voting

“…Acquisitions have long been seen as a source of gains for self-interested management, especially large and risky diversifying deals (Hornstein & Nguyen, 2014). Existing studies in say-on-pay (Ertimur, Ferri, & Muslu, 2011) and divestments (Chen & Feldman, 2018) find that firms with agency conflicts unlock value for shareholders when they reverse prior agencydriven actions.…”

“…Webb et al (2003, p.68) argue that the process of gathering information may be 'incomplete, insufficient and suffer from asymmetry that can easily arise when investors are external to the company and have little way of knowing or substantiating whether the information supplied by managers is correct and true'. Thus, votes cast on acquisitions and divestments, diversifying and refocusing deals in particular, may reflect investors' knowledge of a particular deal vs market sentiment about diversification in general (Hornstein & Nguyen, 2014).…”

The impacts of economic importance difference of a joint venture (JV) held by partners and partners' size difference on the extraction of rivalrous and non-rivalrous private benefits in a JV

“…Following previous study in JVs and Mergers & Acquisition (M&A) (McConnell and Nantell, 1985;Chen, Hu and Shieh, 1991;Chen et al, 2000;Johnson and Houston, 2000;Kumar, 2010a, b;Amici, et al, 2013;Hornstein and Nguyen, 2014), this paper adopts a standard event study approach to capture partner firms' stock market performance due to the JV announcement event. The event study approach can significantly reduce the endogeneity problems between factors such as JV's economic importance and size difference between two partners and the JV consequence outcome measured by the abnormal returns due to such JV event announcements.…”

A bank merger predictive model using the Smoluchowski stochastic coagulation equation and reverse engineering

“…Banks have developed many new innovations, such as bank merging, which has been adopted by countries across the world. There are numerous debates on the reasons why financial organizations such as banks should be merged as well as on the advantages and disadvantages associated with merging actions (Piloff and Santomero, 1998;Berger et al, 2000;Becher, 2000;Focarelli et al, 2002;Scholtens and de Wit, 2004;Koetter et al, 2007;DeYoung et al, 2009;Beccalli and Frantz, 2013;Hornstein and Nguyen, 2014;Ogura and Uchida, 2014;Du and Sim, 2016;Ogada et al, 2016;Farah, 2017).…”