Shareholder investment horizons and the market for corporate control

Corporate Serial Acquisitions: An Empirical Test of the Learning Hypothesis

“…Especially when dealing with hubris and learning, it seems sensible to focus on specific individual decision makers; (ii) we adapt our econometric methods to the natural panel structure of the data (tracking successive deals done by a given CEO); (iii) we investigate the determinants of the TBD, which is, to the best of our knowledge, the first empirical evidence about this attribute of M&A programs; (iv) using a two-step procedure similar to Leschinskii and Zollo (2004) and Gaspar et al (2005), we explicitly control for potential endogenous sample selection biases.…”

Real economy effects of short-term equity ownership

“…This measure complements those used in the existing literature and described above (e.g. Derrien et al (2013), Gaspar et al (2005)). Equation (5) allows for the fact that investors likely hold a diversified portfolio, the components of which are intended to yield returns over different time horizons.…”

“…Such evidence provides the foundation for our modelling assumptions; and gives relevance to our results. Gaspar et al (2005) calculate a churn rate that they use to construct an index of short-term ownership for a sample of U.S. firms. They show that the time horizon of investors has explanatory power for a firm's returns from acquisition decisions.…”

“…However, through a metaanalysis of the existing literature one can deduce some salient facts. Gaspar et al (2005) using data covering 1980-1999 find that acquiring companies in the U.S. generate abnormal returns of −0.2% over a [−1, +1] day window.…”

“…Family ownership, investment churn-rate and other empirical methods have been used as proxies for investor time horizon and its impact on investment decisions, entrepreneurship and stock market returns (see for example Anderson and Reeb (2003), Gaspar et al (2005) and John et al (2008)). This long standing concern over short-term shareholders has led to persistent calls for regulatory intervention to try to encourage long-term share ownership.…”