Upcoming and recent conferences, panel discussions and seminars
2026 events
Tenth Annual Mergers and Acquisitions Research Centre Conference
The Mergers & Acquisitions Research Centre at Bayes Business School and the European Corporate Governance Institute (ECGI) hosted the Tenth Annual M&A Research Centre Conference at Bayes Business School, London.
Sessions took place between 8:30am and 5:30pm on Monday 15 June 2026. The keynote speech "A ten-year retrospective from a practitioner and regulator: How the world of M&A has changed” was delivered by Alan Giles, OBE - former Chairman of The Remuneration Consultants Group and Fat Face Group. The conference was attended by academics, PhD students and alumni.
- Read more about the conference.
The ECGI published a special Blog edition which provides key highlights. Each article offers insights into the various elements that impact the effectiveness and outcomes of M&A strategies, contributing to a comprehensive understanding of the corporate control environment.
Conference Programme
View the conference programme.
Conference organisers: Prof Michel Driessen, Prof Scott Moeller and Prof Anh Tran
Sessions:
*(Author name in bold denotes presenting author)
Title: “Acquiring Supplier Networks: Domestic Mergers for International Supply Chain Resilience”
Authors: Sudipto Dasgupta (Chinese University of Hong Kong), Ling Cen (Chinese University of Hong Kong), Isil Erel (Ohio State University) and Yanru Han (Stevens Institute of Technology)
Abstract: Long-standing international supplier relationships represent valuable and hard-to-replicate intangible assets that mitigate the search and contracting frictions inherent in global value chains. We propose and show that domestic mergers and acquisitions (M&A) serve as a key strategic vehicle for acquiring these established supplier networks, providing a novel source of merger synergy. Using detailed transaction-level shipment data from 2007–2020, we find that post-merger, acquirers systematically adopt the target’s supplier relationships, with a pronounced preference for those that are long-standing. This adoption occurs for both inputs the acquirer already sources (enhancing resilience) and new inputs (facilitating expansion). Consistent with this type of synergy, the likelihood of a merger increases with the similarity of the firms’ imported input portfolios, especially during periods of heightened supply-chain risk, when the value of a target's vetted network is highest. Furthermore, these mergers generate competitive advantages through foreclosure-like effects on target rivals when their supply chains overlap with the acquirer’s, leading to improved valuations and sales growth for target firms. Overall, we show that a primary synergy in many M&As is the acquisition of “relational capital” embedded in the target’s supply chain.
Title: “Bidder Pools in Mergers and Acquisitions”
Authors: Micah Officer (Loyola Marymount University), Bruce I. Carlin (Rice University), Tingting Liu (University of Tennessee), Agathe Pernoud (University of Chicago) and Danni Tu (Southern Illinois University)
Abstract: Allocation mechanisms in M&A deals are complex, but a main feature is that a target board controls who to invite to the sale. In a theoretical model, we show that the optimal size of the bidder pool is negatively related to the correlation among potential acquirers, and that greater correlation (and hence a smaller bidder pool) yields the target a higher surplus from the sale (i.e., higher premium). We test the model empiri cally and show that M&A deals with smaller bidder pools are associated with higher target returns. This is not a result of synergies in the deals: the target’s share of the surplus is simply higher in deals with smaller bidder pools. Finally, we show that cash deals are associated with larger, whereas stock deals have smaller, pools of bidders.
Title: “Monopolizing Minds: How M&As Stifle Innovation Through Labor Market Power”
Authors: Alex Xi He (University of Maryland) and Jing (Sophia) Xue (Georgia State University)
Abstract: This paper argues that mergers and acquisitions (M&As) reduce inventors’ innovation in centives and outputs by increasing firms’ labor market power and limiting the rents inventors can capture. We test this mechanism using individual-level longitudinal data from the U.S. Census Bureau. We find that, at both target and acquiring firms, inventors exposed to greater increases in labor market concentration in already concentrated labor markets produce fewer patents, earn lower wages, and exhibit reduced job mobility following mergers. In aggregate, the negative impact of increased labor market power on inventor productivity outweighs the potential benefits from innovation synergies. Overall, our findings highlight the critical role of labor market dynamics and inventor incentives in evaluating the innovation consequences of M&As.
Title: “Takeovers and Knowledge Worker Productivity”
Authors: Beate Thies (University of Vienna), András Danis (Central European University) and Evgeny Gushchin (Central European University)
Abstract: We study how takeover announcements affect the productivity of knowledge workers employed by target firms. Using data from GitHub to measure individual work output and a stacked event study specification, we find that productivity declines by 14% following takeover announcements. The effect is more pronounced for acquisitions associated with a larger risk of layoffs, specifically within-industry takeovers. Also, the results are weaker in states where takeovers are likely to be motivated by the wish to acquire skilled employees. These patterns are consistent with mechanisms related to stress, anxiety, and distraction induced by takeover uncertainty. The findings highlight a previously under-explored channel through which takeovers can be costly for acquirers. More broadly, the welfare effects of takeovers might extend beyond capital and product markets to include non-trivial productivity and mental health costs for affected workers.
Title: “Maturity Overhang: Evidence from M&A”
Authors: Dirk Hackbarth (Boston University, Zhiyao Chen (City University of Hong Kong), Jarrad Harford (University of Washington) and Yuxin Luo (Boston University)
Abstract: In the context of mergers and acquisitions, this paper analyzes a maturity overhang problem that is due to shorter debt maturities creating higher rollover risk. Using bond transaction data, we develop a market-based mea sure of rollover risk and find that i) rollover risk dampens merger activities at the firm and aggregate levels; ii) acquirers facing higher rollover risk are more sensitive to changes in cash reserves and prefer equity as a payment method over cash; and iii) positive market reactions to cash payment are observed only when firms have low rollover risk. Specifically, a one standard deviation increase in rollover risk leads to a nearly 43% decrease of the av erage acquisition rate, and a 6% reduction in the probability of an all-cash payment. To shed light on our empirical findings, we study a dynamic in vestment model that underscores the importance of precautionary savings and rollover risk for maturity overhang.
Title: “Fix the Price or Price the Fix? Resolving the Sequencing Puzzle in Corporate Acquisitions”
Authors: Eric Talley (Columbia University), Joshua D. Higbee (Ohio State University), Matthew Jennejohn (Johns Hopkins University) and Cree Jones (Brigham Young University)
Abstract: Significant corporate transactions are typically negotiated in stages: core pricing terms are fixed early, with most non-price provisions negotiated later. This contrasts with standard contract theory, where non-price terms are set first and prices are chosen to fine-tune parties’ net payoffs. We reconcile this disconnect by marrying a bargaining model with a search game over innovative contractual provisions, showing that fixing price first can optimally incentivize strategic search investments. We validate our predictions through a natural language processing analysis of M&A transactions and show that a legal shock in Delaware that strengthened price-first contracting norms led to greater contractual innovation.
Title: “Do Business Unit Leaders Matter for Mergers and Acquisitions?”
Authors: René M. Stulz (Ohio State University), Sinan Gokkaya (Ohio State University) and Xi Liu (Miami University)
Abstract: We penetrate the black box of post-acquisition integration process by examining whether business unit leaders (BULs) - executives responsible for integrating and operating acquired targets— shape integration outcomes. Using text-based and financial measures, we find that BUL target industry experience increases (decreases) integration success (failures) through superior realization of revenue and cost synergies. Other BUL attributes are unrelated to integration outcomes. Consistent with the importance of integration for acquisition success, BUL target industry experience enhances acquisition performance, with effects most pronounced when integration challenges are greatest. BULs add no value at earlier transaction stages, except through integration planning and more extensive due diligence.
Title: “Shareholder Activism, Takeovers and Managerial Discipline”
Authors: Francesco Celentano (University of Lausanne & Swiss Finance Institute) and Oliver Levine (University of Wisconsin-Madison)
Abstract: We quantitatively assess the role of activism in the market for corporate control by developing and estimating a model featuring both activism and M&A. We find that activism complements M&A, reducing the agency frictions associated with takeovers. However, activism simultaneously crowds out some M&A activity by substituting for disciplinary takeovers. Both the threat of activism and actual activist intervention create shareholder value by improving CEO incentives, while the value from reduced takeover frictions is primarily captured by acquirers. We find that activists have an information advantage, which is critical to overcoming the free rider problem in activist intervention.
Title: “Are Bidder-Initiated Takeovers Opportunistic?”
Authors: Bjørn Espen Eckbo (Dartmouth College), Tanakorn Makaew (Financial Industry Regulatory Authority) and Karin S. Thorburn (Norwegian School of Economics)
Abstract: Statistically, bidders initiate the deal process to acquire a US public target only in about half of the time, with the other half initiated by the target itself. By accounting for this endogenous initiation choice, we substantially increase power to test whether bidders time the deal initiation to opportunis tically pay for the target with overpriced shares, possibly crowding out mode efficient potential buyers. Our alternative hypothesis is that bidders use shares as acquisition currency to hedge against target adverse selection (provided the target does not substantially undervalue those shares). Inconsistent with bidder opportunism, and regardless of who initiates the deal, bidders are more (not less) likely to use stock as deal payment for targets that are more (not less) precisely informed about bidder true value. Moreover, structural estimation shows that opportunistic bidders crowd out high-synergy rivals in only 6% of transactions—whether the target or the bidder initiates the deal. Finally, conditional on bidder initiation, firm- and sector-specific market valuations further suggest that the typical deal process is sufficiently informative for targets to unravel bidder opportunism in stock-financed takeovers.
2025 events
Ninth Annual Mergers and Acquisitions Research Centre Conference
The Mergers & Acquisitions Research Centre at Bayes Business School and the European Corporate Governance Institute (ECGI) hosted the Ninth Annual M&A Research Centre Conference at Bayes Business School, London.
Sessions took place between 8:30am and 5:30pm on Monday 16 June 2025. The keynote speech “Trends in takeovers and takeover regulation in the UK” was delivered by Ian Hart, Co-Chairman of UK Investment Banking at UBS. The conference was attended by academics, PhD students and alumni.
- Read more about the conference.
The ECGI published a special Blog edition which provides key highlights. Each article offers insights into the various elements that impact the effectiveness and outcomes of M&A strategies, contributing to a comprehensive understanding of the corporate control environment.
Conference Programme
View the conference programme.
Conference organisers: Prof Scott Moeller and Prof Anh Tran
Sessions:
*(Author name in bold denotes presenting author)
Title: "Race, Gender, and Employee Turnover: Evidence from Mergers and Acquisitions”
Authors: Tingting Liu (University of Tennessee), Rui Dai (University of Pennsylvania), Cong Wang (Texas Tech University)
Abstract: Using machine learning on over one million LinkedIn profiles, we construct a comprehensive dataset to examine how employees’ race and gender affect turnover following takeovers. We find that Black and Hispanic (female) employees experience significantly lower turnover rates compared to White (male) employees. These effects are stronger for same-industry acquisitions but not observed in failed deals. Furthermore, we find that race and gender groups that experience higher turnover rates also experience worse subsequent labor market outcomes. Additionally, higher-earning employees in target firms tend to have higher post merger turnover. We also find that labor cost savings are significantly associated with takeover premiums and merger synergies. These results emphasize the role of labor cost savings in driving merger synergies and highlight the importance of employee diversity in
acquirers’ layoff decisions.
Title: "The Real Effects of Interest Limitation Rules: Evidence from M&A Investments”
Authors: Barbara Stage (WHU – Otto Beisheim School of Management), Eliezer M. Fich (Drexel University), Lisa Hillmann (WHU – Otto Beisheim School of Management), Johanna Kling (WHU – Otto Beisheim School of Management)
Abstract: We examine the impact of rules limiting the tax deductibility of interest expenses on merger and acquisition (M&A) investments. These rules aim to curb excessive debt financing and debt shifting incentives. However, debt is crucial for cash-financed M&A deals. Using data from 43 countries, we find that interest expense limitation rules are associated with reduced M&A activity. M&A transactions completed after these rules take effect exhibit lower deal values and inferior quality. This evidence highlights the unintended consequences of anti-tax avoidance regulations, supporting the hypothesis that by increasing the cost of debt financing, these regulations distort resource allocation in the economy.
Title: “M&A and the Rise of Concentration”
Authors: Simcha Barkai (Boston College), Ezra Karger (Federal Reserve Bank of Chicago), Scott Loring (Cornerstone Research)
Abstract: This paper provides the first quantification of the contribution of M&A to rising concentration. Using comprehensive data from the U.S. Economic Census, we show that M&A has contributed to rising concentration in every sector and that M&A contributes 44% of the increase in aggregate concentration. We present an empirical decomposition of changes in concentration that further accounts for the effects of entry and exit. Last, we present analysis designed to help us understand the possible extent to which the relaxing of merger guidelines or lax government enforcement of existing guidelines contributed to the rise in concentration.
Title: "The Cost of Antitrust and Firm Strategic Mergers & Acquisitions”
Authors: Miaoyin (Alexandra) Zhang (Central University of Finance & Economics, Beijing)
Abstract: This study examines how antitrust enforcement influences firms' M&A strategies. We build a theoretical model illustrating two asymmetric firms with differing local market shares. The model yields that when antitrust policies tighten, firms with high local market shares shift investments toward nonlocal markets, while those with lower shares maintain their original investment structure. Paradoxically, this shift undermines antitrust goals, reducing firm welfare and market competition. To explain this, we introduce "antitrust risk" as an explanatory factor to reconcile the seemingly contradictory results. Exploiting the staggered implementation of industry-specific antitrust policies in China, we find supporting empirical evidence that when enforcement is strengthening, overall M&A activities decrease but cross-regional M&As increase, especially for firms that are sensitive to antitrust risk (i.e., high market share firms and private-owned firms). This structural shift also diminishes competition, displaces R&D investment, and worsens firm performance.
Title: “M&As and Innovation: Evidence from Acquiring Private Firms”
Authors: Jana Fidrmuc (University of Warwick), Siti Farida (University of Birmingham), Chendi Zhang (University of Exeter)
Abstract: We show that acquisitions of private targets increase the quantity, quality, and value of the acquiring firms’ patents significantly more than acquisitions of public targets. Moreover, private target acquisitions foster significantly greater innovation synergies, increase total number of inventors, and promote new collaborations among inventors. These outcomes are not driven
by the target’s existing patent portfolios and are most pronounced in breakthrough industries. The patenting increases link to the acquirers’ expertise in identifying innovative private targets. Finally, the patenting increases explain away the higher announcement returns for private versus public target acquisitions. Our findings underscore the role of complementary innovative capabilities in driving value creation through private target acquisitions.
Title: “Looking Beyond the Bigs: What About Subsidiary and Private Targets?”
Authors: Annette Poulsen (University of Georgia), Miguel Puertas (University of Georgia), Jeffry Netter (University of Georgia),
Mike Stegemoller (Baylor University)
Abstract: We analyze a comprehensive set of mergers and acquisitions identified from SDC data spanning 1992 to 2017, which we are currently updating through 2023. Our dataset includes many mergers typically excluded from large-scale analyses due to factors such as the private status of the target or acquirer and the size of the transaction. After reviewing the impact of sample selection criteria on the analysis of merger characteristics, as discussed in Netter, Stegemoller, and Wintoki (2011), we use our extended sample to examine the differential returns to acquirers of public versus private targets. Analysis of acquirer returns for private targets is often based on returns to acquirers when acquiring subsidiaries of public firms where more information about the target is available. Our analysis focuses on the role of information, firm focus, bid resistance, regulatory requirements, and liquidity needs in these acquisitions. This setting provides an ideal context to understand the importance of these factors for both private and subsidiary targets, but we emphasize that subsidiaries of public firms are not necessarily good “comps” for private firms. Management control of private targets is relatively independent, unlike subsidiary managers, whose fate is ultimately determined by parent boards. Therefore, researchers must carefully evaluate the generalizability of results from transactions involving subsidiary targets when applied to private targets.
Title: “The Supply Chain Spillovers of Private Equity Buyouts”
Authors: Olivier De Jonghe (National Bank of Belgium & Tilburg University), Cédric Huylebroek (KU Leuven)
Abstract: This paper examines the supply chain spillovers of private equity (PE) buyouts using unique data on business-to-business sales for the universe of Belgian firms. We show that, during normal times, suppliers of PE-backed firms outperform their peers due to increased demand for inputs from PE-backed customers, rather than due to alternative mechanisms such as knowledge spillovers. In contrast, during economic downturns, while PE-backed firms outperform their peers even more strongly, their suppliers show no signs of outperformance. This can be explained by PE-backed firms exerting pressure on and reconfiguring their supply chains to achieve cost savings for their portfolio companies during periods of economic distress. Finally, beyond their impact on suppliers, we also show that PE-backed firms can impose negative externalities on competitors that rely on common suppliers. Overall, our findings underscore the role of supply chains in PE investors’ ability to create and extract value.
Title: “See the Gap: Firm Returns and Shareholder Incentives”
Authors: Wenyu Wang (Indiana University & Vanderbilt), Eitan Goldman (Indiana University), Jinkyu Kim (Indiana University)
Abstract: Smart money often trades actively during times of large corporate events. We document in the context of mergers and acquisitions that, during the public bid negotiation period, institutional investors increase (decrease) their holdings of acquirers in deals that generate positive (negative) value. The resulting trading profits create a significant gap between the return to the acquiring firm and the return to these investors, and this gap renders firm return a misleading measure of investors’ incentives in pursuing mergers. On average, institutional investors of acquiring firms earn 2.4% from M&A while the return to the acquirer is only -0.9%. The gap widens to 6.3% in deals that deliver volatile returns. We further show how institutional investors’ strategic trading and the resulting gap are impacted by deal characteristics such as merger size and stock liquidity as well as institution characteristics such as initial holdings, portfolio weight, and trading skills. Importantly, institutions that earn a high return gap are associated with weak governance in preempting and correcting value-destroying mergers. Our study highlights that the group of investors who have influence over corporate actions do not necessarily bear the full consequences of such events, and therefore accounting for the dynamics of shareholder
composition is critical in measuring investors’ governance incentives correctly.
Title: "Artificial Intelligence and Merger and Acquisitions”
Authors: Yue Fang (Zhejiang University), Zilong Zhang (Zhejiang University)
Abstract: This study explores the relationship between firms’ artificial intelligence (AI) capabilities and mergers and acquisitions (M&As). We find that firms with higher concentrations of AI talent (high-AI firms) achieve superior acquisition performance during announcement periods. Further analysis shows that this superior performance is particularly evident among acquisitions of data-intensive targets. We then test whether firms leverage the strategic complementarity between AI expertise and data resources, and find that high-AI firms are significantly more likely to merge with data intensive firms and actively hire data analytics specialists prior to acquisitions.
Moreover, mergers with high-AI acquirers and data-intensive targets experience increased patent filings and citations, suggesting better innovation capabilities in the post-merger period. By identifying AI-data synergy as a key driver of value creation in M&As, this research sheds light on how technological advancements are reshaping firm boundaries.
Title: "CEO Incentives and Acquisitions: Evidence from the Pay Ratio Disclosure Mandate”
Authors: Tao Shu (Chinese University of Hong Kong), Sudipto Dasgupta (Chinese University of Hong Kong), Yuxuan Zhu
(Chinese University of Hong Kong)
Abstract: We find that the sensitivity of CEO pay to firm size (pay-size sensitivity) drops by 60% after the first-time disclosure of a relatively higher CEO-worker pay ratio following the 2017 Pay Ratio Disclosure Mandate. The sensitivity of CEO “flow” pay to positive performance (“upside” pay-performance sensitivity) also declines by 86%, while downside pay-performance sensitivity remains unchanged. These results are consistent with greater public attention to CEO compensation in high pay ratio firms curbing CEO pay growth. We show that the change in pay sensitivities is associated with a shift in the type of M&A deals firms engage in, as well as the market reaction to deal announcement. Specifically, firms engage in fewer (more) larger (smaller) deals of higher (lower) quality. These firm size and pay encourages CEOs to switch screening effort from smaller deals to large deals, as they can no longer benefit from undertaking large-scale but potentially value-destroying deals to the same extent. Our results provide novel evidence on how arguably exogenous changes to the drivers of CEO compensation affect CEO decisions and firm outcomes. We provide a simple model showing that while the magnitude of pay-size sensitivity affects the allocation of screening effort between large and small deals, the magnitude of “upside” pay performance sensitivity is irrelevant.
Title: "Institutional Mobility in Global Capital Market”
Authors: Roger Silvers (University of Utah), Rachel M. Hayes (University of Utah)
Abstract: When financial conduct in one country intrudes on another country, country-level institutional features (e.g., securities laws and their enforcement) cease to be effective because of jurisdictional limitations. In this study, we focus on how fragmented regulatory
authority exposes foreign investors to expropriation and information risks. We explore securities regulators’ use of cooperative instruments that enable country-level institutional features to reach foreign jurisdictions. Using a powerful research design that controls for country-level factors (even time-variant ones), we find cooperation is associated with the volume of deals in the cross-border merger and acquisition (M&A) market. Moreover, we find subtle and previously unexplored legal issues affect firm value in ways that refine the
bonding hypothesis. Ultimately, we conclude that institutional features determined at the country-pair level - although largely overlooked by prior work are key determinants of economic outcomes in global markets.
Outlook for M&A 2026
The Mergers & Acquisitions Research Centre (MARC) at the Bayes Business School hosted its 16th Annual Outlook for M&A on Monday, 02 February 2026.
Each year the Business School brings together leading experts in mergers and acquisitions to discuss recent global activity in the markets and predict the landscape for the year ahead. The panel discussion was about the direction of the market for 2025 from the perspective of which industries and regions will be strong and whether the general activity levels will remain high as interest rates rise.
The event was introduced by Professor Scott Moeller, Founder of the M&A Research Centre with more than 100 participants attending, the audience included students, alumni, practitioners and journalists.
This year’s expert panel was chaired by Ian Hart, Advisory Board Chair of the M&A Research Centre and Co-Chairman of UK Investment Banking (UBS). Ian was joined by four experts from the industry, including Liz Claydon (KPMG), Michel Driessen (Director, M&A Research Centre), Todd Partridge (SS&C Intralinks) and John West (Mergermarket - ION Group).
View the programme.
Read about the event: Forecasting M&A in 2026: is there gold somewhere over the rainbow?
Outlook for M&A 2025
The Mergers & Acquisitions Research Centre (MARC) at the Bayes Business School hosted its 15th Annual Outlook for M&A on Monday, 03 February 2025.
Each year the Business School brings together leading experts in mergers and acquisitions to discuss recent global activity in the markets and predict the landscape for the year ahead. The panel discussion was about the direction of the market for 2024 from the perspective of which industries and regions will be strong and whether the general activity levels will remain high as interest rates rise.
The event was introduced by Professor Scott Moeller, Director and Founder of the M&A Research Centre with more than 100 participants attending, the audience included students, alumni, practitioners and journalists.
This year’s expert panel was chaired by Susan Kilsby, Advisory Board Chair of the M&A Research Centre and former Chair of Shire Pharmaceuticals. Susan was joined by five experts from the industry, including Cyril Auger (Ardian), Liz Claydon (KPMG), Ian Hart (UBS). Matt Wells (SS&C Intralinks) and John West (Mergermarket - ION Group).
View the programme.
Read about the event: M&A 2025: the market can float above the sound and fury.
2024 events
Eighth Annual Mergers and Acquisitions Research Centre Conference
Conference date: Tuesday 18 June 2024
The Mergers & Acquisitions Research Centre at Bayes Business School and the European Corporate Governance Institute (ECGI) hosted the Eighth Annual M&A Research Centre Conference at Bayes Business School, London.
Sessions took place between 8:30am and 5:30pm on Tuesday 18 June 2024. The keynote speech “Recent trends in the business environment” was delivered by Yael Selfin, Chief Economist and UK Vice Chair at KPMG. The conference was attended by academics, PhD students and alumni.
Conference organisers: Prof Scott Moeller and Prof Anh Tran
- Read more about the conference
The ECGI published a special Blog edition which provides key highlights. Each article offers insights into the various elements that impact the effectiveness and outcomes of M&A strategies, contributing to a comprehensive understanding of the corporate control environment.
Conference Programme
View the conference programme
Sessions
*(Author name in bold denotes presenting author)
Title: “Is There Information in Corporate Acquisition Plans?”
Authors: Sinan Gokkaya (Ohio State University), Xi Liu (Miami University) and Rene Stulz (Ohio State University and ECGI)
Abstract: For many firms, the acquisition process begins with the development of an acquisition plan that is communicated to investors. We construct a comprehensive sample of acquisition plans to provide novel perspectives on the acquisition process and find that acquisition plans are informative to investors and incrementally predict subsequent acquisition activity. These results are more pronounced for firms announcing their commitment to acquisitions from an internal pipeline. Acquisition plans improve acquisition performance due to learning from market feedback and alleviate acquisition-related investor uncertainties. Communication of acquisition plans does not increase takeover premiums but is less common in more competitive industries.
Title: “Geographic Overlap, Agglomeration Externalities and Post-Merger Restructuring”
Authors: Jarrad Harford (University of Washington), Samuel Piotrowski (Norwegian School of Economics) and Yiming Qian (University of Connecticut)
Abstract: We study how agglomeration forces influence post-merger restructuring. We hypothesize and find that geographic overlap of acquirer and target establishments creates the potential for (co)agglomeration benefits that will differ for horizontal and vertical mergers. In vertical mergers, the target establishments are more likely to be kept when the acquirer establishment is located in the same city, indicating that firms benefit from geographically proximate inputs for production. In horizontal mergers, local redundancy increases the likelihood of target establishment closure rather than being kept or sold, consistent with the hypothesis that the acquirer aims to contain local competition through closure rather than sale. Using proxies to capture three dimensions of (co)agglomeration: input sharing, knowledge spillover, and labor pooling, we find that both horizontal and vertical acquirers are more likely to keep target establishments in proximate cities when (co)agglomeration benefits are high. Retained target establishments benefiting the most from agglomeration externalities in horizontal mergers show a significant increase in productivity. In addition to explaining how acquirers restructure the firm post-acquisition, our findings show how agglomeration externalities are reinforced and expanded by establishment-level decisions made following mergers.
Title: “How Does Financial Reporting Affect the Market for Corporate Control?”
Authors: Eliezer Fich (Drexel University), Torin McFarland (Drexel University) and Paolo Volpin (Drexel University and ECGI)
Abstract: US listed firms with reduced financial reporting (“non-accelerated filers” and “smaller reporting companies”) are 20% less likely to become takeover targets, compared with other firms. This result holds across several empirical specifications, including regression discontinuity analyses (around the public float cutoff to qualify for reduced reporting) and difference-in-differences tests (using the 2007 regulatory change that introduced the “smaller reporting companies” classification). Reduced-reporting firms are sold for less cash but receive higher premia than other targets. However, we find no evidence (using both stock market and accounting performance metrics) that their acquirers are worse off than other acquirers. Consistent with the rationale that financial reporting alleviates asymmetric information, reduced-reporting firms are targeted later in merger waves relative to their industry peers and subject to a permanent stock price revaluation when M&A deals fail.
Authors: Philip Berger (University of Chicago), Rachel Geoffroy (Ohio State University), Claudia Imperatore (Bocconi University) and Lisa Yao Liu (Columbia University)
Abstract: The process of producing and disseminating financial reporting disclosures often involves multiple parties operating under the supervision of multiple regulators. We investigate an important example: conflict of interest (COI) disclosures for fairness opinion (FO) providers in mergers and acquisitions. The Securities and Exchange Commission (SEC) oversees the companies responsible for disseminating FOs and COIs in their SEC filings, whereas the Financial Industry Regulatory Authority (FINRA) regulates the FO providers who supply COI information to their client companies. We assess the effectiveness of each regulator's enforcement efforts and examine whether they act as substitutes or complements when jointly enforcing COI disclosures. We find each regulator is effective when acting as the sole regulator, but that when both have oversight the second regulator reduces the effectiveness of the first. Cross-sectional tests indicate that this substitution effect is reduced when it is more likely both regulators need to coordinate to achieve effective oversight.
Title: “Institutional Blockholder Networks and Corporate Acquisition Performance”
Authors: Gishan Dissanaike (University of Cambridge), Wolfgang Drobetz (University of Hamburg), Marwin Mönkemeyer (University of Cambridge) and Henning Schröder (University of Hamburg)
Abstract: We examine 17,207 U.S. mergers and acquisitions by public firms over the 1980–2019 period and find that the acquirer abnormal announcement returns are higher for firms held by more central investors in the network of active institutional blockholdings. This finding is robust to firm and deal characteristics, and it also extends to alternative network and return measures. To provide evidence on causality, we exploit extreme industry returns that lead to plausibly exogenous variation in investors’ monitoring ability. The positive effect of blockholder centrality on acquirer abnormal announcement returns only exists in information-sensitive (i.e., private) deals and only among institutions that have a comparative advantage in exploiting monitoring information. Our findings suggests that institutional investors obtain an information advantage through the network, which increases their monitoring ability.
Authors: Audra Boone (Texas Christian University), Wouter De Maeseneire (Vlerick Business School), Sébastien Dereeper (University Lille), Mathieu Luypaert (Vlerick Business School) and Mai Nguyen Thuy (Vietnamese German University)
Abstract: Using details from the private phase of the takeover process, we examine how bidding strategies correlate with key takeover outcomes. We find that higher initial offers are followed by fewer bid revisions and an increased likelihood of being the winning bidder. Though there is a positive relation between a higher first offer and the final premium, bidder returns at the first public announcement of the deal are positively related to the initial bid strength in target-initiated deals. In bidder-initiated transactions, stronger initial bids correlate with higher combined target and acquirer returns. In a similar vein, more precise initial bids also increase the likelihood of target acceptance and result in higher acquirer returns in case of auctions, bidder-initiated and cash-paid transactions.
Authors: Kang Cheng (Morgan State University)
Abstract: This study analyzes the associations between ESG disclosure scores and outcomes of business combination deals. Bloomberg’s ESG disclosure scores are regressed against three business combination outcome measures: deal premium, deal duration, and total advisory fees percentage. Empirical findings indicate that higher levels of ESG disclosure do not contribute to increasing deal premium. Higher levels of ESG disclosure are associated with longer deal duration and higher percentage fees paid to advisors. The associations are particularly observed for high environmental impact industries. Findings in this study help to answer the question: if adequacy in self-disclosed, unaudited information contributes to reduce information asymmetry? From the associations with deal outcomes in business combinations, the answer is negative. With unregulated, self-disclosed information, more disclosures are not interpreted as transparency, instead, it might call for more verification during business combination transactions.
Title: “Competition Enforcement and Accounting for Intangible Capital”
Authors: John Kepler (Stanford University), Charles McClure (University of Chicago) and Christopher Stewart (University of Chicago)
Abstract: Antitrust laws mandate regulatory review of mergers and acquisitions (M&A) when the book value of the acquired assets exceeds a specified threshold. However, these policies overlook the fact that accounting standards preclude firms from recognizing most internally generated intangible capital as assets. We show that this omission leads to hundreds of acquisitions of intangible capital-intensive firms—mostly in the pharmaceutical and technology sectors—to go unreported to antitrust authorities each year. Consistent with the potentially anticompetitive nature of these acquisitions, we document that acquirers in unreported deals in developed markets achieve higher equity values, markups, and technological rents. We also show unreported deals in undeveloped pharmaceutical markets exhibit anticompetitive behavior. These deals are nearly three times more likely to consolidate overlapping drug projects, and acquirers are more than three times as likely to terminate these overlapping projects as compared to reported deals. Furthermore, this behavior encourages “copycat” drugs at the expense of novel projects. Our results suggest that the growth of intangible assets may exacerbate market consolidation through unreported mergers in the sectors most concerning to consumers.
Title: “Non-Compete Agreements and the Market for Corporate Control”
Authors: Andrey Golubov (University of Toronto and ECGI) and Yuanqing Zhong (University of Toronto)
Abstract: Non-compete agreements (NCAs) limit outside employment options and, therefore, increase personal costs of job displacement for managers. Using state-level changes in NCA enforceability as a natural experiment, we find that managers are more averse to horizontal takeovers when NCA enforcement tightens. In particular, higher enforceability is associated with fewer takeovers. Those that do materialize are more likely to be hostile, involve higher premiums, and are less likely to complete. Overall, the findings indicate that the use of NCAs and their enforceability have implications for the market for corporate control.
Title: “Growth-promoting Bonuses and Mergers and Acquisitions"
Authors: Tor-Erik Bakke (University of Illinois, Chicago), Mathias Kronlund (Tulane University), Hamed Mahmudi (University of Delaware) and Aazam Virani (University of Arizona)
Abstract: One-third of U.S. top executives have bonus incentives that are explicitly tied to the firm’s size. We study how such “growth-promoting bonuses” influence firms’ mergers and acquisitions (M&A) activities. We find that firms with bonus structures that promote growth are more prone to make acquisitions - especially acquisitions of a scale that help meet the bonus size target. We use shocks to sales from plausibly exogenous exchange-rate changes for exporting firms to identify these effects. Acquisitions by firms with growth-promoting bonuses have significantly lower abnormal returns, destroying value for the acquirers on average. These lower acquirer returns can be attributed to the selection of targets with lower synergies and, to a lesser extent, higher premiums paid. The growth-promoting bonuses tend to be sufficiently large such that - despite negative acquirer returns - the net monetary effect for executives who meet their sales bonus targets with a merger remains significantly positive.
Outlook for M&A 2024
The Mergers & Acquisitions Research Centre (MARC) at the Bayes Business School hosted its 14th Annual Outlook for M&A on Monday, 29 January 2024.
Each year the Business School brings together leading experts in mergers and acquisitions to discuss recent global activity in the markets and predict the landscape for the year ahead. The panel discussion was about the direction of the market for 2024 from the perspective of which industries and regions will be strong and whether the general activity levels will remain high as interest rates rise.
The event was introduced by Professor Scott Moeller, Director and Founder of the M&A Research Centre with more than 100 participants attending, the audience included students, alumni, practitioners and journalists.
This year’s expert panel was chaired by Susan Kilsby, Advisory Board Chair of the M&A Research Centre and former Chair of Shire Pharmaceuticals. Susan was joined by six experts from the industry, including Liz Claydon (KPMG), Russell Enright (SS&C Intralinks), Lucinda Gutherie (Mergermarket - ION Analytics), Edward Little (Ardian), Jana Mercereau (Willis Towers Watson) and Stephen Pick (UBS).
View the programme.
Read the write-up of the event: Experts predict upturn in fortunes after rocky 12 months.
2023 events
Seventh Annual Mergers and Acquisitions Research Centre Conference
The Mergers & Acquisitions Research Centre at Bayes Business School and the European Corporate Governance Institute (ECGI) hosted the Seventh Annual M&A Research Centre Conference at Bayes Business School, London.
Sessions took place between 8:30am and 5:30pm on Monday 19 June 2023. The keynote speech “What’s ‘the Deal’: What’s happened, what’s happening and what may happen - Market insights from the WTW M&A Barometer Survey” was delivered by Amanda Scott, Global Mergers & Acquisitions Leader at WTW. The conference was attended by academics, PhD students and alumni.
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Conference programme
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Sessions
*(Author name in bold denotes presenting author)
Title: “Scope, Scale, and Concentration: The 21st century firm”
Authors: Gerard Hoberg (University of Southern California) and Gordon M. Philips (Dartmouth College)
Abstract: We provide evidence that over the past 30 years, U.S. firms have expanded their scope of operations. Increases in scope and scale were achieved largely without increasing traditional operating segments. Scope expansion significantly increases valuation and is primarily realized through acquisitions and investment in R&D, but not through capital expenditures. We show that traditional concentration ratios do not capture this expansion of scope. Our findings point to a new type of firm that increases scope through related expansion, which is highly valued by the market.
Title: “Merger Waves and Innovation Cycles: Evidence from Patent Expirations”
Authors: Matthew Denes (Carnegie Mellon University), Ran Duchin (Boston College) and Jarrad Harford (University of Washington) Abstract: We investigate the link between innovation cycles and aggregate merger activity using data on patent expirations. We focus on patents that expire due to term expirations, which mandatorily occur at a pre-specified date. We find strong clustering in industry patent expirations (“patent expiration waves”). These patent waves trigger industry merger waves with lower announcement returns and worse long-term performance for acquirers, but higher announcement returns and larger premiums for targets. Acquirers also experience declines in profit margins, cash holdings and investment opportunities, while cutting costs in the year prior to a merger. Overall, we put forth a link, unexplored in the literature, between merger waves and patenting activity.
Title: “Solving Serial Acquirer Puzzles”
Authors: Antonio Macias (Baylor University), P. Raghavendra Rau (University of Cambridge) and Aris Stouraitis (Hong Kong Baptist University) Abstract: Using a novel typology of serial acquirers, we examine several puzzles documented in prior literature. We show that acquisitions by different types of acquirers are driven by different factors, they acquire different sizes of targets, and subsequent acquisitions by acquirers are predictable ex ante. Controlling for market anticipation, the most frequent serial acquirers do not earn declining returns as they continue acquiring, while less frequent acquirers do. Our methodology enhances our understanding of serial acquisition dynamics, anticipation, and economic value adjustments. The methodology is likely to be relevant to topics related to event anticipation beyond those covered in this study.
Title: “The use of escrow contracts in acquisition agreements”
Authors: Sanjai Bhagat (University of Colorado), Sandy Klasa (University of Arizona) and Lubomir Litov (University of Oklahoma)
Abstract: A large fraction of acquisition deals for private firm and subsidiary targets include an escrow contract giving the bidder the opportunity to lay claim on escrow account funds if subsequent to the acquisition the seller fails to meet specific acquisition agreement terms. The likelihood of using an escrow contract is higher when buyer or seller transaction risk is larger. Also, the use of escrow contracts (i) helps to reduce bidders’ due diligence costs, (ii) enables sellers to obtain a higher sale price, and (iii) raises the extent to which an acquisition leads to an increase in bidder firm shareholder value.
Title: “The Incentives of SPAC Sponsors”
Authors: Felix Feng (University of Washington), Tom Nohel (Loyola University, Chicago), Xuan Tian (Tsinghua University), Wenyu Wang (Indiana University) and Yufeng Wu (University of Illinois)
Abstract: The market of Special Purpose Acquisition Companies (SPACs) has exploded in recent years, yet its volatile performance calls into question the implications of this unique business model and particularly the incentives of the SPAC sponsors on the welfare of SPAC shareholders. This paper quantitatively studies these questions by estimating a model featuring the strategic interactions between SPAC sponsors, targets, and investors. The estimation uses a comprehensive hand-collected dataset of SPACs that completed acquisitions by the first quarter of 2022 with rich information such as sponsor concessions, earnouts, redemptions, etc. Agency costs
appear pervasive: the inter-quintile range of returns to non-redeeming shareholders reaches 19% in deals sorted by their degrees of agency conflicts. Average SPAC investors make sizable mistakes in inferring deal quality. Tying more of the sponsor’s promote shares to earnouts and improving the transparency of information significantly reduces the agency cost and improves investors’ expected return, while cutting back the issuance of warrants has a limited impact on the average SPAC investors’ welfare.
Title: “Tax Avoidance through Cross-Border Mergers and Acquisitions”
Authors: Jean-Marie Meier (University of Texas) and Jake Smith (University of Texas)
Abstract: We investigate 13,307 cross-border, tax-haven mergers and acquisitions (M&A) from 1990 to 2017, totalling $4.1 trillion in deal value, or about 30% of total cross-border M&A volume. $2.4 of the $4.1 trillion is beyond what is predicted based on a gravity model with economic fundamentals. Tax-haven M&A result in $31.6 billion in recurring annual tax avoidance. To illustrate the magnitude, for a US firm with no prior cross-border M&A history, buying an Irish firm worth 5% of its total assets would result in an expected decline in its effective tax rate of 3.56 percentage points. For identification, we use a change in US tax law in 2004. Following haven acquisitions, firms are more likely to relocate their headquarters to havens. Our results document that tax avoidance through havens is a significant determinant of cross-border M&A.
Title: “Beyond Culture: How does international migration affect cross-border mergers and acquisitions?”
Authors: Ning Gong (Deakin University), Micah Officer (Loyola Marymount University) and Hong Feng Zhang (Deakin University)
Abstract: We show that a higher migrant stock from an acquiring country to a target country leads to greater deal frequency and dollar value in cross-border acquisitions after controlling for the differences in economic and financial development, regulatory environments, valuations, and cultural distance. Our results support the arguments that migration impacts cross-border deal activity by ameliorating the effect of cultural distance, facilitating post-merger integration, and mitigating information asymmetry between acquiring and target countries. Instrumental variables derived from the interactions of the push and pull factors of migrant flows mitigate endogeneity concerns in our study.
Outlook for M&A 2023
The Mergers & Acquisitions Research Centre (MARC) at the Bayes Business School hosted its 13th Annual Outlook for M&A on Monday, 23 January 2023.
Each year the Business School brings together leading experts in mergers and acquisitions to discuss recent global activity in the markets and predict the landscape for the year ahead. 2022 has set new records but is very different from the expectations of early in the year when the news was all about when lockdowns would end and whether the activity in SPACs would continue. The expert panel will discuss the direction of the market for 2023 from the perspective of which industries and regions will be strong and whether the general activity levels will remain high as interest rates rise.
The event was introduced by Professor Scott Moeller, Director and Founder of the M&A Research Centre with more than 100 participants attending, the audience included students, alumni, practitioners and journalists.
This year’s expert panel was chaired by Susan Kilsby, Advisory Board Chair of the M&A Research Centre and former Chair of Shire Pharmaceuticals. Susan was joined by five experts from the industry, including Cyril Auger (Ardian), Lucinda Gutherie (Mergermarket / ION Analytics), William Mansfield (Credit Suisse), Amanda Scott (Willis Towers Watson) and Matt Wells (S&SC Intralinks).
View the programme.
Read the write-up of the event: Experts warn of tougher times ahead.