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Restructuring strategies are complicated processes and choices are influenced by and interact with the agreements and conflicts of interest among stakeholders. Firms in the emerging economies are characterized by high growth, high leverage, less effective corporate governance and different legal and institution context as compared to the firms in the developed economies. The purpose of this paper is to explain the agency monitoring variables that influence decisions to select and/or avoid restructuring strategies of the firms that have experienced a performance decline in an emerging economy. The authors have chosen Thailand as an example of an emerging economy as it was believed as the center of the major Asian economic crisis in mid-1997.

The sample of the study comprises 120 Thai non-financial firms listed on the Stock Exchange of Thailand, all of which experienced a performance decline for two consecutive years during 1997-2008; the years 1997 and 1998 coinciding with financial crisis. The study uses panel logistic regressions to examine the likelihood of the choices of restructuring strategies given the agency variables after controlling for other possible influences.

The results show that restructuring strategy choices are significantly influenced by both agency factors and control variables. The results show both similarities to and differences from earlier studies of the developed economies. The similarities are found in leverage agency behaviors. The differences in the results are found in the types and the details of the agency factors, in particular the management ownership and governance factors. The authors also explore the effects of the agency variables interactions on the choices of restructuring strategies of the performance-declining firms.

Emerging economies have many similarities, but they also demonstrate some country specific differences. This study is confined to one single country, and thus, may not be comparable with other emerging economies due to differences in factors such as regulatory, institutional, tax environments etc. However, it does show a way to conduct such studies in the context of other countries.

To the knowledge, this is the first comprehensive study of corporate restructuring in an emerging economy, particularly of the South-East Asian economy. The authors also show, for the first time, the agency variables interactions effects on the restructuring strategies of the firms. Thus, the study contributes to the growing literature of the corporate restructuring in terms of the contextual knowledge of the emerging economies.

The role of the internal auditor is evolving rapidly. More and more his ambit is encompassing the whole range of a company's operations. His activities no longer primarily consist of checking for compliance with laid down procedures but are becoming more management orientated and focused on the appraisal of efficiency and effectiveness of operational systems in general. These developments are acknowledged in the Introduction to the new IIA Standards: (IIA, 1978, p. 1):

Takeovers play an important role in the allocation of re‐sources to the most efficient uses and represent a mech‐anism by which corporate resources are transferred from one management team to another (Jensen and Ruback, 1983). A result of this managerial displacement is expected to be an increase in shareholder wealth. This argument pre‐supposes that managers attempting takeovers are motivated to create value for shareholders. This picture of managerial disinterestedness in the service of share‐holders ignores potential agency conflicts between man‐agers and shareholders. When faced with a takeover bid, which if successful may lead to its own displacement, the management team at the target may devise ways of frus‐trating the bid.

The purpose of this paper is to propose various toehold indicators and analyse whether the models incorporating these indicators can be used to establish investment strategies.

Logistic regression is used to test toehold indicator significance.

The results reflect that the designed measures are positively correlated to the likelihood of launching a takeover, although the power of the models to predict out‐sample takeovers is moderate, between 60.71 percent and 71.59 percent. The indicators allow us to design strategies which offer positive abnormal returns. In particular, abnormal return over the Fama‐French factors is 0.5 percent.

Toeholds are used to initiate takeover processes. As previous studies have indicated, a toehold increases the likelihood of success in a tender offer. Nevertheless, the studies on takeover prediction do not include the toehold since it is a variable which is unobservable prior to the announcement of a takeover bid.

This paper investigates the Jensen's free cash flow (FCF) hypothesis in the context of UK cash acquisitions. Under this hypothesis, financial slack induces mangers to acquire targets for cash if such behaviour generates either pecuniary or non‐pecuniary rewards for them, giving rise to a potential agency problem around cash takeovers. We argue that the stronger position of shareholders, as opposed to firm managers, in the UK should help in constraining such potential agency problems around such mergers. Compared to the USA, position, this should make the FCF hypothesis less relevant in the UK.

This paper uses short‐run announcement period returns and long‐run calendar‐time returns in testing our hypotheses.

This paper shows that low leverage and high FCF may be advantageous provided shareholder monitoring is adequate. By analysing both announcement period and long‐term returns, we show that acquirers with high levels of FCF are superior performers, and that any long‐run under‐performance of cash acquirers appears to be associated with low cash resources and low institutional ownership.

Inevitably, long‐run returns measurement is contentious, although we present results from alternative models to mitigate this. Limitations are necessarily imposed by the sample size, meaning that multi‐way partitioning of the data is not feasible.

The practical implications are that the UK regulatory and institutional ownership regime may actually protect the interests of shareholders and mitigate agency problems.

As far as we are aware, this is the first paper to systematically test FCF, leverage and institutional ownership effects in the context of UK cash acquisitions.

This study aims to investigate the occurrence of pre-merger earnings management for a sample of 197 stock- and cash-financed UK acquirers between 1990 and 2009. It also examines the earnings management behaviour around the change in the Corporate Governance Code in 2003 based on the Higgs recommendations.

Mean and median accrual- and real-based manipulation are examined in the period before the announcement of a merger and acquisition. These are compared across stock and cash acquirers as well as before and after the implementation of the Higgs recommendations. Logistic regressions are also run to examine accrual- and real-based manipulation across stock and cash acquirers after controlling for variables that may affect the acquisition type.

The study found some evidence of upward pre-merger accrual-based earnings management by stock-financed acquirers, which is in line with the findings of Botsari and Meeks (2008). Furthermore, no significant changes were found in the post-Higgs period, which indicates that the recommendations put forth by Higgs may not have been successful in mitigating earnings management. The evidence also shows that cash bidders engage in pre-merger real earnings manipulation through lower discretionary expenses, possibly to enhance cash availability for the bid.

The findings in this study confirm earnings management exists around mergers and acquisitions and provide some evidence that the recommendations set out in the Higgs Report do not appear to have mitigated earnings management activities. This is of interest to regulators as well as investors and academicians.

This provides the first analysis in the UK examining the use of real-based earnings management activities by UK acquirers. It also extends prior research around corporate governance changes that occurred in the UK.

The authors investigate the pre-merger process, defined as the period between the announcement and completion of an M&A (mergers and acquisitions) deal. Specifically, the authors examine if the timing of the announcement in a merger wave affects whether or not the M&A deal is completed, and how long this pre-merger process takes. The authors conduct a textual analysis of the 150 largest abandoned M&A deals in the sample. From this, the authors find that competing bidders, regulatory concerns, and shareholder opposition from the acquirer are major roadblocks in the pre-merger process, and that these hurdles often occur jointly. Subsequently, the authors examine a sample of 2,802 announced M&As across four industry waves and find that M&A deals initiated earlier in a merger wave are more likely to be completed and are completed more speedily.

The purpose of this research is to study the impact of divestitures on shareholder wealth. This study covers selloffs of publicly traded companies in Germany, Austria and Switzerland (DACH region) during the period 2002–2018. It aims to understand the overall effect of selloffs on shareholder wealth as well as the impact of important influencing factors.

This study is part of capital market studies which investigate shareholder wealth effects (abnormal returns) using event study methodology. To determine the significance of abnormal returns, a standardized cross-sectional test as suggested by Boehmer et al. (1991) was applied. The sample consists of 393 selloffs of publicly traded companies with a deal value of at least EUR 10m.

The findings confirm the overall positive impact of selloffs on shareholder wealth. The average abnormal return on the announcement day of the sample companies amounts to 1.33%. The type of buyer, the relative size of the transaction as well as the financial situation of the seller in particular seem to influence abnormal returns positively.

This study investigates shareholder wealth creation through selloffs in the DACH region, a largely neglected region in divestiture research, but now very relevant due to increasing pressure of active foreign investors. Sophisticated statistical methods were used to generate robust findings, which are in line with the results of similar studies for the US and the UK.

A number of authors have noted that industrial sector is a significant factor in the design and construction of failure prediction models, suggesting that organisational structures dictate the construction of separate models for different sectors. However, most modellers have been content to amalgamate sub‐sectors of the “manufacturing” classification (often because of otherwise facing sample size difficulties) to produce a single manufacturing sector model. This paper seeks to examine the differences that exist across the manufacturing sector to identify those sub‐sectors for which such amalgamation is inadvisable.

The paper examines the correlation of traditional financial ratios with sector performance for a large sample of UK companies. A proprietary Z‐score failure prediction model is used to evaluate the solvency of 340 manufacturing companies, in order to determine the pattern of misclassification errors, and their association with industrial sector.

The paper identifies sub‐sectors whose inclusion would make traditional models vulnerable to error, and makes suggestions regarding their continued inclusion for modelling purposes.

The paper makes suggestions for data selection in the construction of failure prediction models.

The classificatory ability of failure prediction models should be improved, notably through a reduction in the incidence of Type 2 errors. Users of financial models for evaluating companies as investments and/or their worthiness as suppliers or creditors will have more reliable information at their disposal.

Contribution to knowledge of the explanatory factors associated with corporate failure.

The purpose of this paper is to examine the effects of cross-border mergers and acquisitions (M&As) by firms in the emerging marketing on stock market cumulative abnormal returns (CARs). This research focuses on the acquiring firms in emerging markets and broadens the existing scope which highlights the M&As by firms in developed countries.

Regarding the controversial argument on the effect of cross-border M&As, the authors introduce a resource-based theory to explain the motivation of M&As by Chinese firms, conduct an event study analysis of 472 international acquisitions by Chinese firms from 2010 to 2015 and indicate cross-border M&As as a positive signal in the stock market.

The results reveal that cross-border M&As result in significantly positive CARs in a short term for the acquiring firms listed in mainland markets but not for that in the Hong Kong market. Furthermore, consistent with signaling theory and the investors’ heuristic thinking in decision-making, investors may adopt the technological innovation capability of the country where the target firms locate, and the acquiring firm’s preannouncement in shaping their positive judgment of the acquiring firm’s near future performance.

The authors distinguished the responses of the investors from the mainland and Hong Kong stock markets and investigated how the knowledge of the national innovation capability of the target firm and acquisition preannouncement influence the investors’ interpretation of the cross-border M&As as a market signal.