• Essays On Corporate Finance

      Anderson, Ronald; English, Philip C.; John, Kose; Naveen, Lalitha; Rytchkov, Oleg; Reeb, David (Temple University. Libraries, 2017)
      This dissertation, empirically examines ownership structure and its impacts on shareholder wealth. In the first chapter I examine the relation between ownership structure and M&A target selection when family firms purse acquisitions, focusing on the factors that influence family selection of targets. My results indicate that family firm acquirers select targets that are smaller and have low growth potential. I focus on short- and long-run stock market reactions to merger and acquisition announcements of family versus nonfamily bidders and their associated targets. I find that acquirers with family ownership have better cumulative average abnormal returns in the short run and higher buy-and-hold abnormal returns up to one year after the acquisition. Family firms also take a greater share of the merger synergy than do nonfamily bidders while the overall merger synergy is invariant to ownership structure. These results suggest that family firms pick different targets than nonfamily firms and benefit minority shareholders when they acquire. This chapter provides evidence that family ownership does not destroy value during M&A transactions; instead, the analysis indicates that family owners appear to choose better targets. In the second chapter I examine firms with dual class structures. Firms with limited voting shares, dual class firms, persist over time in spite of the widespread view that they embody a “corruption of the governance system” (Calpers, 2011). I find that founders and their heirs control 89% of dual class firms, making it difficult to disentangle family control and voting rights. I document that family owners hold 30% greater economic exposure in dual class firms than in single class family firms. Investors place lower values on both single and dual class family firms relative to non-family firms. In contrast, non-family dual class firms exhibit a 19% premium relative to single class firms. Further analysis shows that 8 industries contain 58% of these limited voting share firms - industries that require high brand maintenance and intangible assets. Strikingly, I find that outside shareholders of dual class firms earn excess returns of about 350 basis points per year relative to single class nonfamily firms. Additional tests reveal that institutional investors hold more of the floated equity of dual class family firms than found in single class nonfamily firms. Exploring a succession risk premium perspective, I discover these lower values and greater excess returns primarily occur in descendent-controlled firms. Overall, my analysis suggests that limited voting shares provide an important mechanism used by controlling shareholders that arise in industries with specific characteristics.
    • M&A Non-Consummation - A Strategic Option?

      Kotabe, Masaaki; Chi, Tailan; Hopkins, H. Donald; Reeb, David (Temple University. Libraries, 2009)
      This study examines the viability of treating M&A non-consummation decisions (NCDs) as strategic options. A review of published research in strategic management journals reveals that this topic has yet to undergo rigorous academic examination. Putting the M&A non-consummation phenomenon under a strategic management lens, this study asks the following research questions about the acquiring firm: 1) How does an M&A NCD affect the market value of firms? 2) Under what conditions does an M&A non-consummation enhance firms' value? 3) How can an NCD be executed so that it favorably affects the value of the firm? Study data were collected from numerous secondary sources such as CRSP, Ward's Business Directory, Lexis-Nexis Academic Database etc. The study sample size was 158 and for each NCD event, several variables were computed. With cumulative abnormal returns for a (-30, -1) pre-event period -- as a measure of firm performance -- as the dependent variable, multiple regression estimation used the following independent variables: strategic fit, relatedness, cultural fit, timing of NCD and coverage of NCDs. In estimating the regression models, confounding events were identified and controlled for. Several of the study hypotheses are supported, notably the hypotheses pertaining to cultural fit and timing of the NCD. Findings and implications are discussed. Taken as a whole, the study highlights the value of treating M&A NCDs as part of the repertoire of strategic options of acquiring firms.