I am currently a 4th-year Ph.D student in Finance at WHU – Otto Beisheim School of Management and a visiting scholar at Stern School of Business, at NYU. I will be on the job market in 2018-2019.
Chair of Corporate Finance
WHU – Otto Beisheim School of Management
Burgplatz 2, 56179 Vallendar
Are Market Reactions to M&As Biased by Overextrapolation of Salient News?
with ELIEZER FICH from Drexel University
We study earnings surprises released by firms in a takeover target’s 1-digit SIC hours before the M&A public announcement. We find that these surprises correlate with the acquirers’ M&A announcement return, but not with the returns to 4-digit SIC matched bidder and target peer firms. A week after the M&A announcement, acquirers exhibit a stock price reversal and their response to the earnings surprises disappears. We cannot reconcile these findings with rational Bayesian updating, information transmission, or strategic timing theories. The evidence that salient events affect investors’ M&A valuations, supports behavioral theories predicting asset pricing distortions due to cognitive biases.
Do acquirers bribe in cross-border M&A transactions? I explore an exogenous implementation of the OECD Anti-bribery Convention in 41 countries that criminalizes bribe payment in foreign markets. I document that cross-border deal frequency drops significantly from affected countries after the law enactment, and that more corrupt target countries experience a greater deal number decline. These results suggest a hidden use of bribes in cross-border transactions. Further evidence suggests that deal synergy drops due to the prohibition against foreign bribery: deal premium decreases significantly following the laws, and deal abnormal returns drop as the corruption and governance environment in the target country worsens relative to the acquirer country.
“She Is Mine”: Determinants and Value Effects of Early Announcements in Takeovers
with NIHAT AKTAS and BURCIN YURTOGLU from WHU
Best AFFI 2017 Conference Paper; Media coverage: Les Echos
Some bidders voluntarily announce a merger negotiation before the definitive agreement. We propose an “announce-to-signal” explanation to these early announcements: they allow bidders to signal to target shareholders high synergies so as to overcome negotiation frictions and improve success rates. Consistent with signaling, we show that negotiation frictions predict earlier announcements. Early announced transactions are associated with higher expected synergies, offer premium, completion rates, and public competition. Moreover, bidder announcement returns do not suggest overpayment and the existence of agency issues in these transactions. Taken collectively, our findings rule out alternative explanations such as managerial learning from investors and jump bidding.
Work in Progress:
Irreversible Investment under Uncertainty: Do Firm Boundaries Matter?
with JOHNSON MO from NYU Stern
We empirically analyze investment under output price uncertainty when firms face differential asset specificity or irreversibility. We study the oil exploration and production (E&P) industry, where some producers vertically integrate into downstream segments and face higher capital irreversibility. Using exogenous oil price uncertainty shocks, we show that these integrated producers cut capital expenditures significantly more than standalone producers in response to price volatility. 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. We show that our results cannot be explained by intersegment investment transfer.
How Do Corporate M&A Teams Work?
with NIHAT AKTAS, AUDRA BOONE, ALEXANDER WITKOWSKI and BURCIN YURTOGLU