This thesis investigates three topics in empirical corporate finance. In the first essay, the focus is on the role of financial constraints in the market for corporate control. In the second and third essays, we explore the effect of personal connections at board and executive levels on corporate credit rating and initial public offering (IPO) underpricing respectively. In the first essay, using a large sample of US acquisitions made between 1985 and 2013, we study the effect of financial constraints on acquisition gains and acquisition likelihood. Our findings show that financial constraints of target companies significantly increase acquisition premiums and abnormal returns for both parties. Our results further show that the presence of financial constraints in the target is one of the most important determinants of a takeover bid. This supports the idea that acquisitions may improve the ability of financially constrained companies to access capital through a better reallocation of resources within segments of the same company (e.g., internal capital market) or through better access to external markets. This would eventually benefit bidders too, as new capital would be invested in valuable growth opportunities that otherwise would expire unexercised. In the second essay, using a large sample of US public debt issues we show that personal connections between directors of issuing companies and rating agencies result in higher credit ratings. We estimate the average effect to be about one notch. The results are robust to several alternative tests including additional controls for managerial traits, placebo tests and propensity score matching. Moreover, our tests on default rates and bond yields do not appear to reflect a favourable treatment by the rating agency. Rather, they suggest that personal connections act as a mechanism to reduce asymmetric information between the rating agency and the issuer. In the final essay, using a large sample of IPOs in the U.S. we show that interpersonal connections between directors and top executives in issuers and underwriting banks result in significantly lower levels of IPO underpricing. We also examine the issuers' long-term stock returns following their IPOs. Our results indicate that the connected companies' long-term returns are not significantly different from the non-connected companies. This suggests that underwriters set lower levels of underpricing for the connected companies not to treat them favourably, but due to better flow of and stronger reliance on soft information and lower risk exposure.

This paper investigates the reliability of the stock market’s initial reaction to M&A announcements as a predictor of actual post-acquisition performance. The two prevailing methods for evaluating M&A performance are event studies (stock market-based measures) and accounting-based measures. The present study combines these two performance evaluation approaches in a single empirical examination. Both the post-merger buy-and-hold abnormal returns and changes in ROA are used as actual post-acquisition performance variables. The acquirer’s cumulative abnormal return (CAR) around the announcement is used as the market predictor variable. An econometric model is employed to test the predictive power of the announcement-period CAR on the actual performance variables using a sample of 3,208 acquisitions by U.S. public companies from 2010 to 2014. This paper’s main contribution lies both in its methodology and its findings: on the one hand, long-term market and accounting variables are used as dependent variables measuring post-acquisition performance. On the other hand, this paper finds that short-term CAR is not a good predictor of subsequent M&A performance. The results suggest that the acquirer’s prior M&A experience is a positive predictor of post-acquisition performance.

In this dissertation, I focus my research on some of the economically significant and current open problems in international finance, specifically the relationship between Credit Default Swaps (CDS) on sovereign debt, the importance of fundamental dyadic distances on the initiation and completion of cross-border mergers and acquisitions, and the impact of domestic and transnational terrorism on cross-border mergers and acquisitions. In the first essay, we study the relationship between sovereign debt ratings and the information contained in CDS spreads regarding the credit risk of the reference entity. Using data for 54 countries over a twelve-year period, we find that the variation in average sovereign ratings in a given year can be explained by average CDS spreads over the previous three years. In a horse race between CDS spreads and sovereign ratings, we find that CDS spread changes can predict sovereign events while rating changes cannot. In the second essay, we study how dyadic distance influences the initiation, completion, and duration of cross-border mergers and acquisitions. Using a sample of 173,616 cross-border deals announced between 1970 and 2016, we find evidence that cross-country cultural, institutional, geographical, religious, and language differences, all play a deciding role in the initiation of mergers and acquisitions. The completion of acquisitions is independent of cultural factors, but largely depends on differences in economy size, language, religion, and bureaucracy of the acquiring and target countries. Finally, the duration of deals is influenced by idiosyncratic factors only. In the third essay, we study whether incidents of domestic and transnational terrorism impact the propensity of firms to acquire cross-border firms. We adopt a theoretical model to show that high levels of terrorism in the target countries are associated with lower cross-border acquisition flows. Empirically, we exploit the exogenous variation induced by differences in genetic diversity, ethnic fractionalization, and religious fractionalization between acquirer and target countries. Our results show that an target from a country with lower terrorist incidents than the acquirer country are associated with more cross-border mergers and acquisitions.

Donor-accountability demands have increased the importance of indicator-based Monitoring and Evaluation (M & E) for official development assistance (ODA). This unremitting pressure for aid- recipient countries to produce indicators and for donors to judge the success of aid exclusively by indicators is well documented by development scholars and practitioners. The research for this dissertation examined how this pressure reffered to as "indicatorism" influenced and was influenced by the implementation of donor development aid. The donor-funded Kenya Education Sector Support Program (KESSP) served as a case study to address this issue. It investigated the factors that formed "indicatorism" for KESSP; the actual production of indicators for KESSP; the influence of the politics of development aid on M & E; and whether Geographic Information (GI) served as an alternative to indicators in the M & E process. The case study used an archival review of KESSP documentation, detailed observation of KESSP project sites, focus group discussions with KESSP stakeholders at four field sites in Kenya, interviews with donor and government officials, an analysis of KESSP indicators, and an analysis of KESSP's school mapping project (SMP). Through an examination of the historical context preceding KESSP, this dissertation concluded that a sequence of policies fostered a culture of "indicatorism". Donor policies that included structural adjustment and those that promoted global development targets have encouraged both donors and recipient governments to unrelentingly use indicators to judge aid. Within Kenya performance-contracting policies have reinforced this emphasis on indicators. An investigation of how KESSP's indicators were produced revealed that pressures to inflate indicators corrupted KESSP's M & E system. There was strong evidence that national administrative data systems produced exaggerated indicators. However, there was no evidence to suggest that local implementers over-counted core educational statistics intended to produce indicators for KESSP. An investigation of the politics that surrounded KESSP showed that political relations shaped the findings of indicator-based M & E reporting. When relations were strong at the beginning of KESSP, M & E reporting was used to show the success of KESSP. As these relations deteriorated M & E reporting reflected the rifts between donors and the Kenyan government. However, even after donors suspended aid, indicators still framed the discourse about KESSP and free primary education in Kenya. An examination of the use of GI for KESSP's M & E demonstrated that despite its planned use as an integral part of KESSP's M & E, GI was not used to evaluate KESSP. Mapping data about KESSP could have exposed the government to a degree of transparency beyond what reporting aggregate national indicators provided. There are, of course, other explanations why GI was not used. For instance, the rapid creation of new administrative districts could have also made its use infeasible. The absence of transparency in the M & E process could very well be a symptom of the culture of "indicatorism", but this lack of transparency also makes it difficult to rule out alternative explanations about KESSP and its M & E process.

<p>This paper presents an analysis on Due Diligence process as a tool to reduce the Mergers and Acquisition (M&A) risk of failure which is used by the acquirer to gather quantitative but also qualitative information about the target in the pre-merger deal, before to sign the agreement of the deal.</p><p>However, the process is sometimes unknown or underestimated since the executives sometimes want the deal to be closed as soon as possible, and neglect some critical factors which can be important to get a true vision of the target and therefore increase the chance of</p><p>success of the deal in future. In the view of the enormous economic significance in M&A transactions numbers and volume, it is alarming that more of half of all transactions do not lead to the desired objectives. To investigate in this problem, some studies have emphasized Due Diligence impact to increase M&A chance of success.</p><p>Indeed, Due diligence is viewed as the only way to find out as much information as possible on the target company. It is a way to conduct a comprehensive investigation into this</p><p>potential target.</p><p>In this thesis, we will focus on Financial Due Diligence which is an unavoidable way to evaluate the target to allow getting financial information, but show its limits.</p><p>That is the reason why, we will highlight the role of the Strategic Due Diligence in this paper, which fulfill the FDD limits since it allows the bidder to thinks strategically as each deal is unique in what its value drivers are. Finally, in this paper we concluded that the SDD is the way companies should perform the DD to increase the M&A chance of success since each deal is unique in what its value drivers are and that is what SDD is all about.</p><p>To support our paper, we have addressed two interviews with 2 financial analysts who work in audit companies located in Stockholm to gather their points of view on the subject.</p><p>Moreover, both of our case studies on BNP Paribas and HP provide illustrative example on how financial and strategic Diligence can be conduct.</p>

<p>I en pågående globalisering, skapas fler och fler unioner eller liknande handelsavtal, där syftet är att främja den egna regionen och dess markand. Möjligheterna är enorma för företagen inom dessa regioner, då alla barriärer är borta och landsgränserna utsuddade. Detta skapar även hårdare konkurrens och aktörer från andra delar av världen vill komma in på dessa marknader och ta del av vinsterna. Det snabbaste och enklaste sättet att ta sig in på marknaderna är genom förvärv, då befintliga etablerade företag köps upp. Frågan är huruvida dessa regioners marknader reagerar, då ett företag som kommer utifrån regionen köper upp ett företag inom regionen eller om förvärvet sker inom regionen.</p><p>Syftet med denna uppsats är att undersöka om det finns någon mätbar skillnad i den abnormala avkastningen vid gränsöverskridande förvärv, som kan härledas till uppköparens ursprung. Fokus ligger på skillnaden mellan företag från den Europeiska Unionen och företag utanför gemenskapen. Vidare skall denna uppsats undersöka lönsamhetsutvecklingen efter genomfört uppköp.</p><p>Den metoden som har valts för att studera problemet är en eventstudie, som anses vara det mest lämpade vid undersökning av den abnormala avkastningen. En intervju har även genomförts, för att få mer djup i undersökningen och en lönsamhetsundersökning, för att utläsa effekterna hos budföretaget efter förvärvet. I lönsamhetsundersökningen har tre nyckeltal undersökts avkastning på eget kapital, P/E-talet och avkastning på totala tillgångar.</p><p>Resultatet utav studien visade på att avkastningen hos målföretagen som hade köpare från ett land utanför den Europeiska Unionen var störst. Detta betyder även att de förväntas generera högre lönsamhet enligt den effektiva markandshypotesen. En anledning till att gruppen med icke-EU företag genererade en större överavkastning kan vara att de ”delar med sig” av de förväntade framtida vinsterna i större utsträckning varpå deras budpremie var högre. Vid gränsöverskridande företagsförvärv konkurrerar fler potentiella köpare om företaget vilket driver upp budpremien. Att Sverige inte ingår i eurosamarbetet kan vara en anledning till att färre företag inom unionen konkurrerar om att köpa svenska företag varpå premien och därmed överavkastningen i denna grupp är lägre.</p><p>Lönsamhetsundersökningen visade på att gruppen med företag från den Europeiska Unionen upplever en minskning av alla de tre nyckeltalen efter det genomförda förvärvet. Gruppen med företag från utanför unionen å andra sidan upplever en ökning av både avkastning på eget kapital och avkastning på totala tillgångar i perioderna efter förvärvet, vilket visar på att förvärvet varit mer lönsamt för dem. Resultatet från lönsamhetsundersökningen stödjer resultatet från evenstudien då gruppen med företag utanför unionen lyckats generera den största lönsamheten varpå den högre premien från dessa företag var berättigad.</p>

<p>Among the challenges that companies may face during the post M&A phase, cultural integration can be seen as one of the trickiest tasks. Cultural differences which are inevitable in any deal are always there. The link between how people from autonomous groups live together and the deal result is an interesting topic that needs to be investigated. Since we have an interest in developing the understanding of cultural differences during integration process in cross-border M&As, the research question “How do cultural differences arise in cross-border M&As during the integration process and do they impact the deal result?” is formulated.</p><p>This thesis presents a model that demonstrates elements of cultural differences from three levels, national, organizational and personal. In this model, these levels can be seen as interrelated to each other in which the inner layer is impacted by the outer one. As a result, personal culture, as the most inner layer, is doubly impacted by the other two, national and organizational levels. Given that the scope of our thesis is for cross-border M&As, after investigating these three levels of culture, we found that organizational and personal differences are real in any M&As no matter domestic or cross-border deals. Differences at national level, on the contrary, are the first element that should be mentioned as a root of cultural differences in companies from different nationalities.</p><p>From the understanding about emergence of cultural differences, we further study to see if they leave any effect on the deal result. In the empirical section, from the cultural gap analysis of each case, it was surprising to see that the relationship between cultural gap and deal result of two of four cases, are opposite to Rankine´s theory. At this point, we can see that M&As between companies similar in culture is not always successful or that failure between organizations having significantly different cultures is not always true, and then the empirical study on the acculturation dynamics made the further explanation that cultural differences are not the critical factor leading to success or failure, but rather how participants in integration perceive and respond to the cultural differences will impact the deal result.</p>

This study seeks to understand the scope and types of public relations practices in Japan, how public relations practices of Japanese and foreign companies differ, how media respond differently to the public relations activities of Japanese and foreign companies, and how "foreignness" affects public relations activities of multinational enterprises in Japan. The sole academic journal in the field of public relations in Japan and the single commercially published public relations industry magazine were submitted to an empirical content analysis. Additionally, three cases of contest for corporate control, two of which were between an American activist fund and a Japanese company, and one between a Japanese investment fund and a Japanese company, were analyzed using a case study approach. Press releases and newspaper articles about these cases were also content analyzed. The results show that among public relations activities, crisis category appeared the most frequently in the public relations industry journal and corporate communication category appeared the most frequently in the public relations academic journal. The analysis of the cases shows that the American fund at first faced problems communicating with its stakeholders but improved its communication activities in subsequent years with better results. The content analysis of the press releases shows that American fund uses more quotes and persuasive messages in the press releases and Japanese newspapers do not treat domestic and foreign entities differently. The overall results confirm the importance of culture in public relations practices.

The objective of this study is to examine the association between goodwill and governance structures – specifically, potential agency conflicts and internal and external board monitoring mechanisms – over a four-year period (2004-2007). To do this, I perform two distinct analyses to test (1) whether governance structures appear to be determinants of aggregate goodwill, and (2) whether governance structures appear to moderate investors’ perceptions of aggregate goodwill. I then extend these tests to a sample of U.S. merger and acquisition (M&A) transactions where I calculate a more refined measure of residual goodwill and re-perform the tests using this alternative goodwill measure. I find that potential agency conflicts are associated with both goodwill and residual goodwill, whereas monitoring mechanisms appear to have little measureable association with either of the goodwill measures. In addition, I provide evidence that investors perceive goodwill balances less favorably when agency conflicts are high and limited evidence that their perceptions of goodwill improve when external monitoring is strong. Based on these findings, I conclude that governance structures should be considered when evaluating goodwill. My results also suggest that previous findings based on residual goodwill may need to be reevaluated. Specifically, my analyses highlight an important distinction between the purchase price and consideration elements of residual goodwill, and I propose future avenues of research which may be used to investigate this important distinction further.

In business today efforts are being taken in order to grow, while some firms slowly grow organically others decide to perform a merger or an acquisition (M&amp;A). Firms performing M&amp;As have a high failure rate and many times this is caused by a poorly handled post-acquisition process. Small and medium-sized enterprises (SMEs) have, according to researchers, not the same ambition to grow compared to large firms, and the research area concerning the post-acquisition process is often from a large firm perspective. However, SMEs do perform M&amp;As as well and therefore it is in our interest to investigate the post-acquisition process in SMEs and see how the post-acquisition process is performed in these firms. The purpose of this thesis is to investigate the post-acquisition process in SMEs, this to highlight the SME characteristics in a post-acquisition process. Our methodological approach in this study is hermeneutic. To collect empirical information we performed an interview study, where semi-structured interviews with the managing director or a member of the management team in four SMEs have been conducted. A model for analyzing has been constructed, which helped us to process the empirical information from a hermeneutic perspective. The reason why the studied firms performed a M&amp;A was to get access to a new customer base and to strengthen their market positions. The focus in the post-acquisition process has been on external value creation since the customers are highly valuated, and this can be related to the uncertain financial and environmental situation that SMEs experience. All firms in the study have chosen a high level of integration, though the planning in the firms has not been that extensive as the post-acquisition literature suggests. Further, several elements within the human resource area have been neglected in their planning, despite this three of the firms experienced a limited amount of resistance to change and this ought to be related to their SME characteristics. The employees are willing to follow the direction stated by the managing director, who has a high influence on the organization’s culture. In the firms we studied the centralization of power is one important element and the acquiring firms have preferred a unicultural organization, and in most cases a congruence con-cerning culture have occurred.