*(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.