/channels/taxonomy/term/8469/all en /channels/channels/news/value-eye-beholder-relative-valuation-roles-earnings-and-book-value-merger-pricing-270686 <p><strong>Author</strong>: <strong><a href="//www.mcgill.ca/desautels/maryjane-rabier">MaryJane Rabier</a> </strong></p> <p><strong>Publication</strong>: <em>The Accounting Review</em>, Vol. 93, No. 1, 2018, pp. 335-362</p> <p><strong>Abstract</strong>:</p> <p>Gupta and Gerchek (2002) argue that different acquirers can arrive at different equity valuations for the same target depending on their strategic intent. A reason for acquirers' equity valuations to vary, holding target fundamentals constant, may be that individual acquirers place different weights on underlying fundamentals. I examine this possibility using Burgstahler and Dichev (1997)'s theoretical framework. They argue that the relative importance of earnings and book value depends on expected adaptation, which is the likelihood that the existing earnings generating process will be altered. Using restructuring costs to proxy for expected adaptation at the individual acquirer level, I find that the association between the target's earnings (book value) and acquirers' bid prices is decreasing (increasing) in expected adaptation, consistent with theoretical predictions. These findings are less pronounced during merger waves and intense bid competition for the target.</p> <p><strong>Read full article</strong>: <a href="http://aaajournals.org/doi/10.2308/accr-51785?code=aaan-site"><em>The Accounting Review</em></a></p> <p> Thu, 28 Sep 2017 14:33:05 +0000 webfull 131511 at /channels /channels/channels/news/acquisition-motives-and-distribution-acquisition-performance-270685 <p><strong>Author</strong>: <a href="//www.mcgill.ca/desautels/maryjane-rabier"><strong>MaryJane Rabier</strong></a></p> <p><strong>Publication</strong>: <em>Strategic Management Journal</em>, Vol. 38, No. 13, 2017</p> <p><strong>Abstract</strong>: </p> <p><em>Research summary</em>:</p> <p>I examine how acquisition motives relate to the distribution of post-acquisition performance. I argue that acquisitions motivated by operating synergies have the potential to experience greater gains than acquisitions driven by financial synergies but are harder to value and implement, making them more uncertain. Using SEC filings, conference calls and press releases to capture acquisition motives, I find that acquirers pursuing operating synergies are more likely to experience highly positive and highly negative long-term returns than acquirers pursuing financial synergies.</p> <p>I also find that acquisition experience and geographic proximity to targets soften acquirers' extreme downside outcomes in operating synergy acquisitions. My theory and results suggest that approaches that emphasize average outcomes for acquirers and use industry classifications to capture acquisition motives may be incomplete.</p> <p><em>Managerial summary</em>: </p> <p>Managers engage in acquisitions for various reasons. In this study, I find that reasons related to operating synergies (e.g., revenue growth through new product offerings or cost savings through economies of scale) are more likely to result in extreme high and low performance outcomes for the acquiring firm compared to reasons related to financial synergies (e.g., diversification of cash flow streams).</p> <p>In addition, I find that the acquirer's prior acquisition experience and the geographic proximity between the target and acquirer help soften the extreme low performance outcomes related to operating synergies. </p> <p><strong>Read full article</strong>: <em><a href="http://onlinelibrary.wiley.com/doi/10.1002/smj.2686/full">Strategic Management Journal</a></em></p> <p> Thu, 28 Sep 2017 14:26:03 +0000 webfull 131510 at /channels /channels/news/corus-buys-shaw-media-257793 <p>"Toronto-based Corus Entertainment is buying Shaw Media from Shaw Communications in a $2.65-billion deal. The move shuffles ownership of 19 specialty TV channels including Global, Food Network Canada, HGTV Canada, HISTORY, Slice, National Geographic Channel and Showcase between two companies that are controlled by the Shaw family. Corus also owns a network of radio stations and the Nelvana animation studio." (Source: <a href="http://www.cbc.ca/news/business/corus-entertainment-shaw-media-1.3401473">CBC</a>)</p> Thu, 14 Jan 2016 15:25:21 +0000 webfull 115144 at /channels