Las tareas pendientes de la reforma panameña

___

Relevant Accounting Standards

The main accounting standard for mergers and acquisitions is IFRS3 Business Combinations. For restructuring activities the relevant standard is IAS37 Provisions, Contingent Liabilities, and Contingent Assets.

Additional Reading

As the size of this chapter attests, the study of mergers, acquisitions and corporate restructuring is huge. Below is a list of recent papers in the area. Naturally, the categorization of papers is not mutually exclusive, and papers do overlap categories. However, hopefully the groupings will aid the reading effort.

The Merger, Acquisition and Corporate Restructuring Process

Antoniou, A., P. Arbour and H. Zhao (2008) ‘How much is too much: are merger premiums too high?’, European Financial Management, vol. 14, no. 2, pp. 268–287. UK.

Betton, S., B.E. Eckbo and K.S. Thorburn (2009) ‘Merger negotiations and the toehold puzzle’, Journal of Financial Economics, vol. 91, no. 2, pp. 158–178. US.

Boone, A.L. and J.H. Mulherin (2007) ‘How are firms sold?’, Journal of Finance, vol. 62, no. 2, pp. 847–875. US.

Bouwman, C., K. Fuller and A. Nain (2009) ‘Market valuation and acquisition quality: empirical evidence’, Review of Financial Studies, vol. 22, no. 2, pp. 633–679. US.

Dittmann, I., E. Maug and C. Schneider (2008) ‘How Preussag became TUI: a clinical study of institutional blockholders and restructuring in Europe’, Financial Management, vol. 37, no. 3, pp. 571–598. Germany.

Eckbo, B.E. (2009) ‘Bidding strategies and takeover premiums: a review’, Journal of Corporate Finance, vol. 15, no. 1, pp. 10–29. International.

Ekkayokkaya, M., P. Holmes and K. Paudyal (2009) ‘The euro and the changing face of European banking: evidence from mergers and acquisitions’, European Financial Management, vol. 15, no. 2, pp. 451–476. Europe.

Faccio, M. and R. Masulis (2005) ‘The choice of payment method in European mergers and acquisitions’, Journal of Finance, vol. 60, no. 3, pp. 1345–1388. Europe.

Harford, J. (2005) ‘What drives merger waves?’, Journal of Financial Economics, vol. 77, no. 3, pp. 529–560. US.

Hodgkinson, L. and G.H. Partington (2008) ‘The motivation for takeovers in the UK’, Journal of Business Finance and Accounting, vol. 35, nos. 1/2, pp. 102–126. UK.

Holmen, M. and J. Knopf (2004) ‘Minority shareholder protection and private benefits of control for Swedish mergers’, Journal of Financial and Quantitative Analysis, vol. 39, 167–191. Sweden. Laeven, L. and R. Levine (2007) ‘Is there a diversification discount in financial conglomerates?’,

Journal of Financial Economics, vol. 85, no. 2, pp. 331–367. US.

Lambrecht, B.M. and S.C. Myers (2007) ‘A theory of takeovers and disinvestment’, Journal of Finance, vol. 62, no. 2, pp. 809–845. Theoretical paper.

Luo, Y. (2005) ‘Do insiders learn from outsiders? Evidence from mergers and acquisitions’, Journal of Finance, vol. 60, no. 3, pp. 1951–1982. US.

Maksimovic, V. and G. Phillips (2008) ‘The industry life cycle, acquisitions and investment: does firm organisation matter?’, Journal of Finance, vol. 62, no. 2, pp. 673–708. US. Martynova, M. and L. Renneboog (2008) ‘A century of corporate takeovers: what have

we learned and where do we stand?’, Journal of Banking and Finance, vol. 32, no. 10, pp. 2148–2177. Review paper.

Martynova, M. and L. Renneboog (2009) ‘What determines the financing decision in corporate takeovers: cost of capital, agency problems, or the means of payment?’, Journal of Corporate Finance (forthcoming). Europe.

___

Rhodes-Kropf, M., D.T. Robinson and S. Viswanathan (2005) ‘Valuation waves and merger activity: the empirical evidence’, Journal of Financial Economics, vol. 77, no. 3, pp. 561–603.

US.

Rossi, S. and P.F. Volpin (2005) ‘Cross-country determinants of mergers and acquisitions’, Journal of Financial Economics, vol. 74, no. 2, pp. 277–304. International.

Wright, M., L. Renneboog, T. Simons and L. Scholes (2006) ‘Leveraged buyouts in the UK and continental Europe: retrospect and prospect’, Journal of Applied Corporate Finance, vol. 18, no. 3, pp. 38–55. Europe.

Pre-Restructuring

Botsari, A. and G. Meeks (2008) ‘Do acquirers manage earnings prior to a share for share bid?’, Journal of Business Finance and Accounting, vol. 35, nos. 5/6, pp. 633–670. UK.

Dong, M., D. Hirshleifer, S. Richardson and S.H. Teoh (2006) ‘Does investor misvaluation drive the takeover market?’, Journal of Finance, vol. 61, no. 2, pp. 725–762. US.

Field, L.C. and J.M. Karpoff (2002) ‘Takeover defenses of IPO firms’, Journal of Finance, vol. 57, no. 5, pp. 1857–1889. US.

Jenkinson, T. and H. Jones (2004) ‘Bids and allocations in European IPO bookbuilding’, Journal of Finance, vol. 59, no. 5, pp. 2309–2338. Europe.

Kisgen, D.J., J. Qian and W. Song (2009) ‘Are fairness opinions fair? The case of mergers and acquisitions’, Journal of Financial Economics, vol. 91, no. 2, pp. 179–207. US.

Veld, C. and Y.V. Veld-Merkoulova (2008) ‘An empirical analysis of the stockholder–bondholder conflict in corporate spin-offs’, Financial Management, vol. 37, no. 1, pp. 103–124. US.

Post-Restructuring

Devos, E., P. Kadapakkam and S. Krishnamurthy (2009) ‘How do mergers create value? A comparison of taxes, market power, and efficiency improvements as explanations for synergies’, Review of Financial Studies, vol. 22, no. 3, pp. 1179–1211. US.

Draper, P. and K. Paudyal (2008) ‘Information asymmetry and bidders’ gains’, Journal of Business Finance and Accounting, vol. 35, nos. 3/4, pp. 376–405. UK.

Hagendorff, J., M. Collins and K. Keasey (2008) ‘Investor protection and the value effects of bank merger announcements in Europe and the US’, Journal of Banking and Finance, vol. 32, no. 7, pp. 1333–1348. Europe.

Masulis, R.W., C. Wang and F. Xie (2007) ‘Corporate governance and acquirer returns’, Journal of Finance, vol. 62, no. 4, pp. 1851–1889. US.

Moeller, S.B., F.P. Schlingemann and R.M. Stulz (2005) ‘Wealth destruction on a massive scale? A study of acquiring-firm returns in the recent merger wave’, Journal of Finance, vol. 60, no. 2, pp. 757–782. US.

Paul, D.L. (2007) ‘Board composition and corrective action: evidence from corporate responses to bad acquisition bids’, Journal of Financial & Quantitative Analysis, vol. 42, no. 3, pp. 759–778. US.

Rajan, R., H. Servaes and L. Zingales (2000) ‘The cost of diversity: the diversification discount and inefficient investment’, Journal of Finance, vol. 55, no. 1, pp. 35–80. US.

Renneboog, L. and P.G. Szilagyi (2008) ‘Corporate structuring and bondholder wealth’, European Financial Management, vol. 14, no. 4, pp. 792–819. Review.

Santalo, J. and M. Becerra (2008) ‘Competition from specialized firms and the diversification– performance linkage’, Journal of Finance, vol. 62, no. 2, pp. 851–883. US.

Wang, C. and F. Xie (2009) ‘Corporate governance transfer and synergistic gains from mergers and acquisitions’, Review of Financial Studies, vol. 22, no. 2, pp. 829–858. US.

Endnotes

1 Mergers between corporations require compliance with government laws. In virtually all countries the shareholders of each corporation must give their assent.

2 Control can usually be defined as having a majority vote on the board of directors.

3 M. Porter, Competitive Advantage (New York: Free Press, 1998). Finanza aziendale

Endnotes

827

___

___

4 M.C. Jensen and R.S. Ruback, ‘The market for corporate control: the scientific evidence’, Journal of Financial Economics, vol. 11 (1983).

5 Every country’s tax system is different, and almost always complex. The best way to find up-to-date information is by visiting the website of a country’s tax authority. A good site with summary informa- tion on many countries’ tax systems is www.worldwide-tax.com.

6 Although diversification is most easily explained by considering equities in different industries, the key is really that the returns on the two equities are less than perfectly correlated – a relationship that should occur even for equities in the same industry.

7 A dividend is taxable to all tax-paying recipients. A repurchase creates a tax liability only for those who choose to sell (and do so at a profit).

8 The situation is actually a little more complex: The target’s shareholders must pay taxes on their capital gains. These shareholders will probably demand a premium from the acquirer to offset this tax.

9 This ratio implies a fair exchange, because a share of Regional is selling for 40 per cent (=$10/$25) of the price of a share of Global.

10 In fact, a number of scholars have argued that diversification can reduce firm value by weakening corporate focus, a point to be developed in a later section of this chapter.

11 The analysis will be essentially the same if new equity is issued. However, the analysis will differ if new debt is issued to fund the acquisition, because of the tax shield to debt. An adjusted present value (APV) approach would be necessary here.

12 The basic theoretical ideas are presented in S. Myers and N. Majluf, ‘Corporate financing and investment decisions when firms have information that investors do not have’, Journal of Financial Economics (1984).

13 For example, see G. Andrade, M. Mitchell and E. Stafford, ‘New evidence and perspectives on mergers’,

Journal of Economic Perspectives (Spring 2001); and R. Heron and E. Lie, ‘Operating performance and the method of payment in takeovers’, Journal of Financial and Quantitative Analysis (2002).

14 J. Doukas and O.B. Kan, ‘Does global diversification destroy firm value?’, Journal of International Business Studies (2006).

15 See J.M. Campa and I. Hernando, ‘Shareholder value creation in European M&As’, European Financial Management (2004).

16 Taken from G. Andrade, M. Mitchell and E. Stafford, ‘New evidence and perspectives on mergers’,

Journal of Economic Perspectives (Spring 2001), Table 1.

17 A. Antonios, P. Arbour and H. Zhang, ‘How much is too much? Are merger premiums too high?’,

European Financial Management (2008).

18 S. Datta, M. Iskandar-Datta and K. Raman, ‘Executive compensation and corporate acquisition decisions’, Journal of Finance (December 2001).

19 From J. Harford, ‘Corporate cash reserves and acquisitions’, Journal of Finance (December 1999), p. 1969.

20 U. Malmendier and G. Tate, ‘Who makes acquisitions? CEO overconfidence and the market’s reaction’,

Journal of Financial Economics (2008).

21 However, as stated earlier, managers may resist takeovers to raise the offer price, not to prevent the merger.

22 J. Wulf, ‘Do CEOs in mergers trade power for premium? Evidence From “mergers of equals”’, Journal of Law, Economics, and Organization (Spring 2004).

23 S. Kaplan and M. Weisbach, ‘The success of acquisitions: evidence from divestitures’, Journal of Finance

(March 1992).

24 R. Michaely and W. Shaw, ‘The choice of going public: spinoffs vs. carveouts’, Financial Management

(Autumn 1995).

25 J. Allen and J. McConnell, ‘Equity carve-outs and managerial discretion’, Journal of Finance (February 1998).

To help you grasp the key concepts of this chapter check out the extra resources posted on the Online Learning Centre at www.mcgraw-hill.co.uk/textbooks/hillier

Among other helpful resources there are PowerPoint presentations, chapter outlines and mini-cases. Finanza aziendale