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In recent times there has been an explosion in the number and value of mergers and acquisitions. The pressing question that is argued by both managers and academicians…
In recent times there has been an explosion in the number and value of mergers and acquisitions. The pressing question that is argued by both managers and academicians relates to the performance of these high value decisions. This paper examines the literature relating to the performance of mergers and acquistions with a view to throwing some light on the question. Criticisms of the existing literature are provided, as also are specific recommendations for future research such as including more longitudinal instead of cross‐sectional studies.
Mergers and acquisitions are widely recognized as a fast‐track to organizational growth, increased profitability and greater market share. They seem to offer easy gains without the pain of lengthy sales drives or costly R&D programs. However, several recent studies have found that around half the mergers analyzed had negative impacts on share values. In the rush to merge, companies conveniently ignore high merger failure rates when the mistakes of others could be the starting point for their own success.
This case presents the “best practices” of a highly successful post-merger integrator that grew from $400 million in 1997, to $1.5 billion in 2000, to $4 billion in 2002…
This case presents the “best practices” of a highly successful post-merger integrator that grew from $400 million in 1997, to $1.5 billion in 2000, to $4 billion in 2002. The case focus is on the $4.0 billion IT sector of Northrop Grumman, a company confronting immense change in the rapidly consolidating defense business. This integration is unique in that the product is a complete melding of various companies, systems, leaderships, and cultures of 11 legacy organizations. Not only is the result an organization with a new identity, but also one with new strategic capabilities unavailable to any of the stand-alone legacy companies. A teaching note is available to registered faculty, along with video clips that include footage of weapons systems (e.g., B-2 bomber) and information about the company's PMI process.
Accounting research has emphasized target and bidder managers' incentives to manipulate earnings during corporate control contests. However, prior studies examining…
Accounting research has emphasized target and bidder managers' incentives to manipulate earnings during corporate control contests. However, prior studies examining earnings management by takeover targets have obtained mixed results. Moreover, the existing evidence is mainly based on US data and hostile mergers and acquisitions (M&A) transactions. The purpose of this study is to examine earnings management by friendly takeover targets in the year preceding the deal announcement in Switzerland.
The paper examines earnings management practices of a sample of 50 Swiss firms that were targets of a friendly takeover proposition during the period 1990‐2002. Discretionary accruals are used as a measure of earnings management. It uses a matching approach and a cross‐sectional regression analysis to test the hypothesis of earnings management by takeover targets.
The paper expands and provides further international insights to the existing literature through the investigation of earnings management by takeover targets managers in a European setting and in a friendly corporate control environment.
These empirical findings document the existence of a significant downward earnings management during the year preceding the transaction. These results suggest that earnings management incentives may differ between negotiated friendly and hostile disciplinary transactions.
In December 2001, after a six-month process of vying for AT&T's Broadband, the president of cable operator Comcast Corporation, had just received word that Comcast's…
In December 2001, after a six-month process of vying for AT&T's Broadband, the president of cable operator Comcast Corporation, had just received word that Comcast's $72-billion offer had won the auction. Comcast, the cable industry's third-largest operator, would merge with industry leader AT&T Broadband to form a company with more than $20 billion in revenue and an unparalleled distribution (a presence in 22 of the nation's top 25 markets). Now the presidents of both companies began to consider their post-merger integration strategies. What was important and how should they prioritize their activities? How could they get all stakeholders to understand the rationale for the deal and its business goals and excited about the new AT&T Comcast?
This paper aims to consider how top corporate executives in a variety of industries can find important lessons in the recently published sixth edition of Benjamin Graham…
This paper aims to consider how top corporate executives in a variety of industries can find important lessons in the recently published sixth edition of Benjamin Graham and David Dodd's Security Analysis (New York: McGraw‐Hill, 2008).
This paper includes an interview with the lead editor of the book, value investor Seth Klarman. He explains key strategic lessons that non‐financial executives can learn from the value investing concepts and methodology.
The insights contained within Security Analysis can and should be leveraged by business leaders and strategists to create value for their firms.
Graham and Dodd‐based valuation and investment is a viable method with which to assess corporate strategic initiatives (such as mergers and acquisitions, share buy‐backs, etc.).
This paper, the first in a business strategy journal, explains how business leaders can become adept at using modern applications of Graham and Dodd‐based valuation insights and technology to inform their strategic decision‐making.