I will join Rotterdam School of Management at Erasmus University as an Assistant Professor of Finance in September 2019.
“She Is Mine”: Determinants and Value Effects of Early Announcements in Takeovers (with NIHAT AKTAS and BURCIN YURTOGLU)
Journal of Corporate Finance, 2018, 50: 180-202
Best AFFI 2017 Conference Paper; Media coverage: Les Echos
Some M&A bids are voluntarily disclosed by the bidders prior to the signature of a definitive agreement to signal high synergies to target shareholders and to improve success rates. These early announced transactions are also associated with higher offer premium, completion rates, and public competition.
When firms are connected to Wall Street Journal (WSJ) reporters, they receive markedly more favorable news coverage upon an M&A event and better market reactions to these mergers. For identification, I instrument the connected coverage with the reporters’ turnover and find similar results. Furthermore, using Rupert Murdoch’s acquisition of the WSJ as an exogenous shock to journalistic independence, I show that firms previously connected to Mr. Murdoch receive better coverage and more positive stock returns after the ownership change.
Presentations: EFA (Doctoral Tutorial), Helsinki Finance Summit, Paris December Finance Meeting
Are Market Reactions to M&As Biased by Overextrapolation of Salient News?
with ELIEZER FICH from Drexel University
We find that earnings surprises released in a takeover target’s industry hours before the M&A announcement correlate with the acquirers’ M&A announcement return. A week after the M&A announcement, acquirers exhibit a significant stock price reversal. We cannot reconcile these findings with rational Bayesian updating, information transmission, or strategic timing theories. The evidence is most consistent with behavioral theories predicting asset pricing distortions due to cognitive biases.
Presentations: ASSA Atlanta, Research in Behavioral Finance Conference
Using surveys from 65 largest firms from Austria, Germany and Switzerland, we find a growing reliance on the firm’s own employees for implementing takeover strategies. Internal teams create the most value in the deal origination and post-merger stages by directing transaction rationales, screening targets, and employing performance metrics to assess post-merger success. Team size and financial experience are negatively associated with announcement returns, while having a more formal structure improves deal performance. We find that M&A team factors can explain approximately 45% of the acquirer fixed effects in announcement return regressions.
Presentations: AFFI 2018
I find that the implementations of anti-bribery laws, which criminalize acquirers for foreign bribery transactions, reduce aggregate cross-border takeovers by 30%, acquirers’ gains by over half, and bid premium by 10%. These findings support the efficient side-payment model, which predicts a positive relation between bribery and transaction value.
Presentations: AFFI 2016, Conference on Empirical Legal Studies, FMA (Doctoral Student Consortium)
Investment under Uncertainty: Do Firm Boundaries Matter?
with JOHNSON MO from NYU Stern
Studying the oil exploration and production industry, we find that vertically integrated producers cut investments significantly more than standalone producers, by up to 11%, in years of high output price uncertainty. This finding is consistent with a real option model of investment, where a higher level of capital irreversibility amplifies the uncertainty effects on real investment.
Presentations: Causal Inference Workshop at Northwestern University