The Value Creation Potential of High-Tech Mergers

Kohers, Ninon; Kohers, Theodor

doi:10.2469/faj.v56.n3.2359

Cited by 120 publications

(100 citation statements)

References 38 publications

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“…These results are in line with the work of Asquith (1983), Eckbo (1983), Malatesta (1983), Asquith, Bruner, and Mullins (1983), Loderer and Martin (1990), N. Kohers and T. Kohers (2000), Martynova and Renneboog (2006), who found positive abnormal returns for both companies. The results of the combined analysis, instead, are in line with Malatesta (1983), Franks, Harris, andTitman (1991), Servaes (1991), Healy, Palepu, andRuback (1992), who found positive and statistically significant combined values.…”

Section: Resultssupporting

confidence: 91%

“…Kohers and T. Kohers (2000), Black, Carnes, and Jandik (2001), Ferris and Park (2002), Mahate (2003, 2006), in this one also negative results are confirmed, and in particular that mergers do not appear to generate value for shareholders. The results obtained in this study confirm those found by Intrisano and Rossi (2012) for the short term in the banking sector.…”

Section: Resultsmentioning

confidence: 56%

“…Kohers and T. Kohers (2000) examined a sample of 304 mergers between high-tech firms in the period 1984-1995 and found negative (-37.39%) but not statistically significant values in the five years after the merger.…”

Section: Literature Reviewmentioning

confidence: 99%

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The Post-Merger Performance: Evidence From Italy

2012

CBR

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The objective of this paper is to investigate whether mergers create value for shareholders in both the short and long term. For this purpose, 120 announcements of mergers that were registered in Italy during the period 1994-2006 among listed companies were examined. The short-term analysis was conducted using the event study methodology in order to estimate the cumulative abnormal returns (CARs) in the time window around the announcement date (-10, +10). In this work, the sample of 120 mergers was divided into two sub-samples: the first considers the mergers that were carried out in all sectors of the economy, and the second focuses only on bank mergers. From the results obtained it would appear that, while the sub-sample of all mergers registered a statistically significant value creation for the shareholders of both the bidder and target companies, values also confirmed by combined analysis, the second sub-sample registered negative values for bidder companies and positive values for target companies. Negative values also seem to be confirmed by the results of the combined analysis both at the date of announcement and throughout the entire period of observation. For the long-term analysis, the Buy and Hold Abnormal Returns (BHARs) methodology was used, with which it was possible to observe the returns for three years. In the 36 months following the merger, the portfolios showed a significant destruction of value.

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Section: Resultssupporting

confidence: 91%

Section: Resultsmentioning

confidence: 56%

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The Post-Merger Performance: Evidence From Italy

2012

CBR

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“…Some researchers go further to measure alliance success using proxies such as stock value increase (Kale, Dyer, & Singh, 2002;Kohers & Kohers, 2000). Since Gulati (1998) cautioned exclusive use of financial measurement, we adopted 3 items from the items used in Lai & Chang, (2010) including financial and non-financial measures that indicate alliance success based on the perception of the respondents using a 7 point Likert scale.…”

Section: Methodsmentioning

confidence: 99%

The Comparative Effects of Transaction Cost Economics and Resource Based View: A Technological Alliance Motivational Perspective

Kim¹

2016

IJBSR

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This paper examines the impact of two main alliance motivation theories, transaction cost economics (TCE) and resource based view (RBV), on alliance processes among Korean manufacturing high-tech ventures. Results show that TCE and RBV are complimentarily explaining the formation of inter-firm alliances. TCE variables are more related with alliance partner characteristics while RBV is more linked with partner capabilities. Both show positive effects on performance. No significant effect is found on determining an alliance governance structure. While selecting appropriate technological alliance partners show positive effects on performance, no significant effect is found between alliance governance structure and performance. Factors of both theories impacting each alliance stage and analytical explanations of such impacts are discussed.

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“…According to Kohers and Kohers (2000), the values of high-tech firms are dependent on outcomes of research and development projects. There is much uncertainty surrounding the value of a high tech firm, which increases the potential loss from overpayment by bidders.…”

Section: Effect Of High-tech Targetsmentioning

confidence: 99%

Determinants of the medium of payment used to acquire privately-held targets

Madura

Ngo²

2010

J Econ Finan

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Since private firms have a unique ownership structure, the method of payment decision when acquiring private firms is influenced by a different set of factors than the method of payment decision when acquiring public firms. We find that bidders are more likely to pay for private targets with stock when the capital gain tax rate is relatively high. This relationship is attributed to greater tax benefits to private owners who receive stock in periods when the capital gains tax is high. Bidders are more likely to use stock in takeovers when the targets are high-tech firms, which we attribute to protection against overpayment by using a contingent pricing method. Bidders are more likely to use cash in takeovers since the Sarbanes-Oxley Act, which we attribute to the higher level of due diligence by bidder managers and board members, and therefore a reduced need for contingent pricing methods like stock. Overall, the results suggest the likelihood of using stock to acquire private targets is positively related to the information asymmetry between the parties, while the likelihood of using cash is greater when conditions (such as SOX) reduce the information asymmetry.

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The Value Creation Potential of High-Tech Mergers

Cited by 120 publications

References 38 publications

The Post-Merger Performance: Evidence From Italy

The Post-Merger Performance: Evidence From Italy

The Comparative Effects of Transaction Cost Economics and Resource Based View: A Technological Alliance Motivational Perspective

Determinants of the medium of payment used to acquire privately-held targets

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