Thesis (Ph.D)--Management, Georgia Institute of Technology, 2009. / Committee Chair: Eun, Cheol; Committee Member: Clarke, Jonathan; Committee Member: Jayaraman, Narayanan; Committee Member: Lee, Jeongsik; Committee Member: Li, Haizheng. Part of the SMARTech Electronic Thesis and Dissertation Collection.

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published_or_final_version / Law / Master / Doctor of Legal Studies

This thesis consists of two essays in corporate finance, one on newly listed firms’ post-IPO activities as acquisition targets and the other on corporate executive compensation. In the first essay, I examine a large sample of U.S. newly listed firms to analyze their likelihood of becoming a takeover target. I find that 27 percent of newly listed firms are acquired within five years after the IPO, which is compared with the seasoned-firm counterpart of 17 percent. This difference is economically large, statistically significant, and robust to various firm and market characteristics controls. Several recent studies have reported newly listed firms’ active activities as an acquirer. Contributing to this literature, my finding further identifies an active role of IPO firms as a takeover target. My finding is consistent with the presumed motivation of firms’ going public for a “double-exit” strategy: To sell the shares through a takeover after the company goes public. Economic rationales for this strategy include advantages from auctioning off a minority stake to dispersed shareholders and more efficient bargaining in takeover negotiations due to increased share liquidity and reduced uncertainty after the IPO. Therefore, going public can be an optimal first step in the process of selling a company. In further support of this motivation, I find that IPO firms, as an acquisition target, receive higher takeover premiums than do comparable privately held targets and seasoned target firms. In conclusion, my findings are consistent with the double-exit strategy predicted by theory, suggesting that IPOs facilitate subsequent sales of the companies and that the strategy is economically justified. In the second essay, I study executive compensation under the Japanese corporate governance system. In March 2010, the Japanese regulator enacted the first legislation regarding the disclosure of director compensation to named individuals. With access to the first publicly available data for Japanese executives, I document comprehensive evidence on the level, structure, and mechanisms of CEO compensation. My findings reveal Japanese practices in CEO pay that differ from the well-known Anglo-American model in significant ways. Its distinct features include base salary dominance and unusually low levels of pay and pay variation. I also identify significant impacts on the compensation system of corporate governance and U.S. influence factors, such as keiretsu groups, financial institutions, US-style compensation committees, and cross-listing on US stock exchanges. / published_or_final_version / Economics and Finance / Doctoral / Doctor of Philosophy

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Embraced in this study, is the content and structural approach on how corporate mergers and acquisitions should be planned and executed to facilitate post-acquisition synergies and improvement in customer service levels. The project covers Saambou bank post-acquisition business failure after take-over by First Rand Group, in a horizontal integration process that did not diversify or restructure product or service offerings between the two banks. There being no positive impact on post-acquisition market share and competition sustainability by the two banks, it implied that, the post-acquisition strategy did not adequately address the business risk factors that ultimately impaired the expected synergies of a take-over bid. Lack of proper post-acquisition business plan resulted in corporate failures pertaining to ineffective competitive strategies, non optimization of market and service levels, compounded by poor corporate governance resulting in the bank's internal control procedures and processes failing. Furthermore, poor customer service levels and transgression of the Bank's Usury Act regulations, rendered the organization more uncompetitive. The over-reliance on few large corporate customer deposits added a huge element of financial risk that marginalized Saambou bank's going concern prospects. Hence, upon experiencing few large corporate deposit withdrawals, for instance by Investec, resulting in the bank undergoing liquidity problems that resulted in it being placed under curatorship. / Thesis (MBA)-University of KwaZulu-Natal, 2006.

This thesis examines the role of market micro-structure and communication in takeovers that involve shareholders' investment decisions and the selection of a takeover mechanism by a raider under asymmetric information. For this purpose, rational expectations equilibrium models are employed and examples are worked in detail. / In the context of market micro-structure, it is shown that there is a greater probability of success of a takeover when the shareholders are risk averse that when they are risk neutral, and the probability that a takeover succeeds is related non-positively to the fraction of shares held by the raider. / In order to study communication, two takeover mechanisms are studied which are tender offers and negotiated takeovers. A negotiated takeover allows for communication between the shareholders and the raider before any takeover announcement. It is shown that communication offsets partially the negative impact of risk aversion on the probability that a hostile takeover occurs.

The work was conceived as an attempt to document an aspect of what has been called the rise of the "corporate economy" or of "managerial capitalism" (or, less informatively, the "new industrial revolution"): that is the relative decline of market relations within the system of industrial capitalism and the corresponding growth of economic activity within large corporations. Though this process of change began in Britain in the late nineteenth century, it advanced more slowly than the contemporaneous movement in the United States. Hence, it is argued, the interwar years saw the crucial developments in the structure of industry in Britain, though these have been underestimated because of the absence of a reliable descriptive study of this period. Attention is focussed on the role of mergers in this structural change, since a merger, being a discrete event in the biography of a firm, throws the causes of these developments into clear relief. The study is designed as a critical gloss on economic generalisations about the rise of large scale enterprise based on the propensity to monopolise, an explanation with no diachronic significance; and on the crude technolo- gical and economic determinisms dominating the historical writing which add little to Philip Snowden's classic statement that "trusts ... are inevitable. They will continue, whatever obstacles we attempt to put in their path". [continued in text ...]