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The purpose of this paper is to investigate whether ex ante board connections and director retention result in agency costs to target company shareholders in the form of reduced payment in mergers and acquisitions transaction.

The authors employ detailed data of ex ante board connection and director retention in the mergers and acquisition in the UK from 1999 to 2015. Ex ante board connections are measured as proportion of target and acquirer companies’ directors worked on the same board at any time prior to the takeover, while director retention is measured as proportion of target companies’ directors remains on board after the takeover is completed. For mergers and acquisition payment characteristics, the authors examine takeover premium, cash payment percentage and offer price adjustment.

The authors find that ex ante board connections and director retention lead to reduced offer prices and lower proportions of cash payment. Notably, when there is no connection and target directors are not retained, the authors find that the bidding companies increase their final offer by £14m more than in other scenarios. The authors also document strong evidence that ex ante board connections lead to a higher probability of director retention.

The paper highlights that ex ante board connections and director retention will lead to a significant cost on target company shareholders. The authors recommend that a more detailed set of information on ex ante board connections and intended target board retention should be disclosed.

Poison pill adoption is often considered as the most effective tactic to fend off an unsolicited takeover bid. However, it is difficult to identify the deterrent effect because the adoption is naturally endogenous. The purpose of this paper is to use plausibly exogenous instruments to mitigate the endogeneity problem.

The author employs two econometric models: the linear probability model and the bivariate probit model to examine the effect of poison pills on the outcome of a takeover.

Using a sample of 655 unsolicited takeovers, the author finds that poison pills substantially reduce the likelihood that a takeover bid, once undesirably placed, is completed. This negative impact strongly supports the manager entrenchment hypothesis in that managers adopt poison pills to ensure the continuation of their private benefits. However, the author finds no strong evidence consistent with the shareholder interest hypothesis that poison pills enhance the management’s ability to negotiate higher premiums or reject inadequate offers.

The demise of the market for unsolicited takeovers with the disappearance of poison pills can be explained by the fact that poison pills, if adopted, will have an absolute deterrent effect on the takeover likelihood of success, and targets always have the power to adopt them instantly.

There should be policies to limit the power of managers to adopt poison pills because it causes the entrenchment problem which will negatively affect the firm value.

The author tackles the problem of the endogeneity of poison pill adoptions. The author shows that poison pills have a strong negative effect on the takeover outcome and the result can explain the decreasing number of unsolicited takeovers.

There is little known globally on the association among the independent shareholder, board size and merger and acquisition (M&A) performance. This paper addresses the global issue about cross-border M&A in banking sector, particularly exploring the role of difference in the independent shareholder and board size between acquirer and target banks on synergy gains based on the international study.

Based on cross-border bank M&As data on 59 deals from 1995 to 2009, we initially apply social network analysis techniques to explore the country connectedness of the acquirer-target banks in cross-border M&As. Ordinary least squares (OLS) with robust standard errors is further used to investigate synergy gains within the difference in the degree of bank independent shareholder and board sizes between the acquirer and target banks.

Our results indicate that the acquiring banks are generally interconnected with the targeted banks and that some of acquiring banks are clearly concentrated in Asian countries including China, Hong Kong, and Philippines. Moreover, we find that cross-border M&As with larger difference in independent shareholders between the bidder and target bank would result in higher synergy gains in all cases of takeover premiums on 1 day, 1 week and 4 weeks. In addition, financial differences between the bidder and target banks have a significant impact on synergetic gains, a topic not explored in previous studies. There is no evidence that institutional and governance differences between bidder and target bank have significant cross-border impacts on takeover premiums with respect to 1 day, 1 week and 4 weeks, respectively.

This paper contributes to the literature by exploring the international issue about the role of difference in the degree of bank independent shareholder and board sizes between acquirer and target banks on synergy gains. Based on bank cross-border M&As data on 59 deals from 1995 to 2009, we initially apply social network analysis to explore the country connectedness of acquirer-target bank in cross-border M&As, while ten ordinary least squares (OLS) with robust standard errors is used to investigate synergy gains within the difference in the degree of bank independent shareholder and board sizes between acquirer and target banks.

The purpose of this paper is to examine the relation between managerial entrenchment and dividend policy for a large number of US industrial firms and examine the relative importance of three competing explanations behind the empirical association between managerial entrenchment and dividend policy, namely, the entrenchment irrelevance hypothesis, the dividend signaling hypothesis, and the optimal entrenchment hypothesis.

Utilizing all firms in the Investor Responsibility Research Center database, Compustat and center for research in security prices (CRSP), this paper investigates firm's propensity to pay dividends based on various logit and Tobit regressions as a function of managerial entrenchment measured by Gompers et al. G index after controlling for known determinants of firms' dividend decisions during the period from 1990 to 2003.

Results show that firms with entrenched managers are more likely to pay dividends. Their high propensity to pay persists over time. A large cash reserve can be used to deter hostile takeovers. Paying dividends reduces cash holdings, leaving the firm more vulnerable to hostile takeovers. In equilibrium, value‐maximizing firms with weak investment opportunities provide managers against takeovers to induce them to distribute cash rather than build a warchest against unwanted takeovers.

The main finding confirms the belief that firms choose a combination of anti‐takeover provisions and dividend policy to maximize shareholder value, evidence in favor of the optimal entrenchment hypothesis.

This paper aims to evaluate the relation between acquisition premiums and amounts recognised as identifiable intangible assets (IIAs) in business combination, in periods before and after transition to International Financial Reporting Standards (IFRS).

This is an empirical archival research using data from business acquisitions.

In the pre-IFRS period, there is evidence of firms recognising IIAs in business combinations having higher acquisition premiums. This association of acquisition premiums and IIAs ceased with transition to IFRS, notwithstanding the relative latitude provided in accounting standards for the recognition of IIAs.

This paper complements the study by Su and Wells (2015) which founds little association between IIAs and performance subsequent to business acquisitions prior to transition to IFRS. The results here suggest that it is attributable to overpayment. Problematically, the incentives for opportunism remain and an issue requiring address is whether alternative sources of accounting flexibility in relation to business combinations exist, such as goodwill which is no longer subject to mandatory amortisation.

The results are consistent with accounting opportunism and suggest “overpayment” and accounting flexibility having an economic consequence. This would be expected to result in asset impairments in subsequent periods; however, there is little evidence of this occurring.

These results have relevance for regulators concerned with the operation of regulation relating to business acquisitions (AASB 3) and intangible assets (AASB 138).

This paper complements a number of papers concerned with the recognition of IIAs in business combinations and confirms what many researchers in the area typically assume (triangulation).

This research uses accounting information to supplement abnormal returns evidence in order to gauge the performance of greenmailed firms. Our results support the management entrenchment hypothesis; target firm earnings are poor relative to industry in the years surrounding the greenmail event, and earnings do not significantly improve as would be expected under the shareholders' interest hypothesis. This result holds after adjusting for greenmail premia net of tax effects. Evidence on investment spending suggests firms that pay greenmail differ substantially from their industries, but in a negative direction. In contrast, the industry‐adjusted earnings of non‐greenmail repurchasing firms are significantly greater than the earnings of greenmailed firms. Together, these results are consistent with the contention that greenmailed firms are not managed in shareholders' interests; they underperform their industry, the poor operating results are not attributable to higher investment outlays associated with a long‐term strategic focus, and performance does not improve. This is consistent with observed negative abnormal returns being attributable to both a lost takeover premium and a lost opportunity for improved corporate performance.

Takeovers create a potential conflict of interest between target shareholders and directors. While mergers generally create value for the target shareholders, their directors will typically lose their board seats and likely face a financial loss or loss of prestige. The purpose of this paper is to examine evidence to support or refute that directors may act in their own best interests at the expense of shareholders.

The authors reason that if directors act in their own best interests, then acquiring firms will seek targets with older board members who are closer to director retirement and are therefore less reluctant to give up their board seats. The paper uses data of 528 banks between 1999 and 2004 to estimate logistic regressions controlling for variables relevant to takeover probability. In the hypotheses, the authors test for the significance of the average director age on a board.

The paper finds a highly positive significant relation between the average age of a board of directors and the probability of takeover. Furthermore, this variable is more robust and has greater explanatory power in predicting takeover targets than all other financial, ownership and governance variables commonly controlled for and included in this study. This suggests that older directors are less prone to agency problems and more willing to make decisions that will likely result in the loss of their board seat.

These findings have important policy implications on director retirement policies such as director age versus term limits. The results also have implications on the use of director golden parachutes. Finally, the authors highlight a strategic consideration for acquiring firms seeking takeover targets.

This paper is the first, to the best of the authors' knowledge, to document board age as an important governance characteristic.

The purpose of this paper is to provide empirical evidence of international rent sharing in multinational enterprises. It looks at changes in rent sharing before and after the acquisition of a company by a foreign entity, and assesses the role of target and acquirer profitability in the wage setting process for the target firm. It therefore contributes to the evaluation of the impact of a form of globalization (inward foreign direct investment (FDI)) onto wages.

The authors use a unique firm level longitudinal dataset of M & As in Belgium between 1998 and 2010. The authors construct a micro-level dataset containing takeover and accounting information for target and acquiring firms. The empirical set up permits to net the estimates from selection effects in the choice of target firm, using propensity score matching and a difference-in-difference approach.

The authors find evidence that the deal does not significantly affect the degree of domestic rent sharing, but it enables international rent sharing. The authors qualify the results in terms of the acquirer’s location, industry link with the target and controlling stake. Further robustness specifications include different profits and controls, and a comparison with a sample of domestic acquisitions.

The sample of matches for acquired firms is constructed using propensity scores, which may not perfectly capture the differences between targeted and non-targeted companies. Although estimates should be net of selection effects, other sources of endogeneity may still make the estimates inconsistent.

Updating the discussion on the labor market consequences of globalization, and on foreign takeovers in particular.

The discussion on international takeover should take into account not only the extensive margin (i.e. labor adjustments) but also salaries. The authors argue that through a precise channel (rent sharing) international takeovers of domestic companies may benefit the domestic labor force.

The dataset was constructed for the purposes of this analysis; rent sharing is tested in a takeover scenario for the first time, thus avoiding selection biases.

The purpose of this paper is to describe the wealth expropriation from minority to majority shareholders due to the lack of legislation protecting the interests of minority shareholders in an acquisition deal, validating the claims made on studies made by Zingales and by La Porta et al.

Despite an overall takeover premium of nearly 250 percent, most minority shareholders actually suffered wealth losses ranging from US$ 7.1 to 31.14 millions. These losses are measured using different methodologies, such as accounting value; liquidation value; and economic value.

The Campos Chilenos case study presented here serves as a testing platform for the relationship between well‐developed legal systems and economic development in both a current and future sense. In a current sense, the case illustrates how inadequate minority shareholder protection led to minority shareholder wealth expropriation, discouraging minority investment from both domestic and foreign investors (and limiting economic development).

Future implications lay in the corporate governance regulation reforms passed in the aftermath of the Campos Chilenos case. If the Chilean government actively enforces new regulations, the level of economic development in Chile will exceed that of its peers in Latin America and other emerging economies, as claimed by La Porta et al.

This study will be useful for governance makers and regulators in emerging countries.

Drawing attention to the significant number of unsuccessful (abandoned) cross-border merger and acquisition (M&A) transactions in recent years, the purpose of this paper is to analyze three litigated cross-border inbound acquisitions that associated with an emerging economy – India, such as Vodafone-Hutchison and Bharti Airtel-MTN deals in the telecommunications industry, and Vedanta-Cairn India deal in the oil and gas exploration industry. The study intends to explore how do institutional and political environments in the host country affect the completion likelihood of cross-border acquisition negotiations.

Nested within the interdisciplinary framework, the study adopts a legitimate method in qualitative research, that is, case study method, and performs a unit of analysis and cross-case analysis of sample cases.

The critical analysis suggests that government officials’ erratic nature and ruling political party intervention have detrimental effects on the success of Indian-hosted cross-border deals with higher bid value, listed target firm, cash payment, and stronger government control in the target industry. The findings emerge from the cross-case analysis of sample cases contribute to the Lucas paradox – why does not capital flow from rich to poor countries and interdisciplinary M&A literature on the completion likelihood of international takeovers.

The findings have several implications for multinational managers who typically involve in cross-border negotiations. The causes and consequences of sample cases would help develop economy firms who intend to invest in emerging economies. The study also offers some implications of M&A for telecommunications and extractive industries.

Although a huge amount of extant research investigates why M&A fail to create value to the shareholders during the public announcement and post-merger stages, there is a significant dearth of research on the causes and consequences of delayed or abandoned national and international deals. The paper fills this knowledge gap by discussing an in-depth cross-case analysis of Indian-hosted cross-border acquisitions.