Going Public to Acquire? The Acquisition Motive in IPOs
Ugur Celikyurt, Merih Sevilir, Anil Shivdasani
Journal of Financial Economics,
Nr. 3,
2010
Abstract
Newly public firms make acquisitions at a torrid pace. Their large acquisition appetites reflect the concentration of initial public offerings (IPOs) in mergers and acquisitions-(M&A-) intensive industries, but acquisitions by IPO firms also outpace those by mature firms in the same industry. IPO firms' acquisition activity is fueled by the initial capital infusion at the IPO and through the creation of an acquisition currency used to raise capital for both cash- and stock-financed acquisitions along with debt issuance subsequent to the IPO. IPO firms play a bigger role in the M&A process by participating as acquirers than they do as takeover targets, and acquisitions are as important to their growth as research and development (R&D) and capital expenditures (CAPEX). The pattern of acquisitions following an IPO shapes the evolution of ownership structure of newly public firms.
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A New Metric for Banking Integration in Europe
Reint E. Gropp, A. K. Kashyap
Europe and the Euro,
2010
Abstract
Most observers have concluded that while money markets and government bond markets are rapidly integrating following the introduction of the common currency in the euro area, there is little evidence that a similar integration process is taking place for retail banking. Data on cross-border retail bank flows, cross-border bank mergers and the law of one price reveal no evidence of integration in retail banking. This paper shows that the previous tests of bank integration are weak in that they are not based on an equilibrium concept and are neither necessary nor sufficient statistics for bank integration. The paper proposes a new test of integration based on convergence in banks' profitability. The new test emphasises the role of an active market for corporate control and of competition in banking integration. European listed banks profitability appears to converge to a common level. There is weak evidence that competition eliminates high profits for these banks, and underperforming banks tend to show improved profitability. Unlisted European banks differ markedly. Their profits show no tendency to revert to a common target rate of profitability. Overall, the banking market in Europe appears far from being integrated. In contrast, in the U.S. both listed and unlisted commercial banks profits converge to the same target, and high profit banks see their profits driven down quickly.
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Will There Be a Shortage of Skilled Labor? An East German Perspective to 2015
Herbert S. Buscher, Eva Dettmann, Marco Sunder, Dirk Trocka
IWH Discussion Papers,
Nr. 13,
2009
Abstract
We analyze the supply and demand of skilled labor in an East German federal state, Thuringia. This state has been facing high unemployment in the course of economic transformation and experiences population ageing and shrinking more rapidly than most West European regions. In a first step, we use extrapolation techniques to forecast labor supply and demand for the period 2009-2015, disaggregated by type of qualification. The analysis does not corroborate the notion of an imminent skilled-labor shortage but provides hints for a tightening labor market for skilled workers. In the second step, we ask firms about their appraisal of future recruitment conditions, and both current and planned strategies in the context of personnel management. The majority of firms plan to expand further education efforts and hire older workers. The study closes with policy recommendations to prevent occupational mismatch.
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Why Do Payday Lenders Enter Local Markets? Evidence from Oregon
H. Evren Damar
Review of Industrial Organization,
Nr. 2,
2009
Abstract
This study analyzes payday lenders’ entry strategies in the state of Oregon in order to look for changes in the nature of the industry and its relationship to traditional financial institutions. The results of fixed-effects logit regressions suggest that payday lenders have started to enter areas already being served by banks. Furthermore, the presence of “incumbent advantage” in entry decisions may also have implications concerning the level of competition in the industry. Finally, since payday lenders also enter areas with large Hispanic populations, it is still possible that payday loans represent the sole source of credit for certain segments of the population.
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Shrinking due to corpulence? BMI in childhood predicts subsequent linear growth among US children and youth, 1963-1970
Marco Sunder
Annals of Human Biology,
2008
Abstract
While the USA is one of the most opulent countries, its population is not among the tallest but is among the most corpulent. This short report investigates the association between body mass index in childhood and subsequent change in height-for-age at the individual level, based on data from the National Health Examination Study (1963-1970). A sub-sample of participants in this survey was measured twice at intervals between 2.3 and 4.4 years, and assessed bone age can be used to account for differences in maturation at baseline. Regression results indicate that a BMI-for-age above the 85th percentile is associated with a reduction in growth by 0.03-0.06 height-for-age standard deviations per year, or roughly 1 cm within 4 years. An inefficiently high nutritional status in childhood may thus jeopardize subsequent linear growth. However, the trans-Atlantic height gap is considerably larger than what this empirical relationship could predict.
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An Assessment of Bank Merger Success in Germany
Michael Koetter
German Economic Review,
Nr. 2,
2008
Abstract
German banks have experienced a merger wave since the early 1990s. However, the success of bank mergers remains a continuous matter of debate.This paper suggests a taxonomy to evaluate post-merger performance on the basis of cost and profit efficiency (CE and PE). I identify successful mergers as those that fulfill simultaneously two criteria. First, merged institutes must exhibit efficiency levels above the average of non-merging banks. Second, banks must exhibit efficiency changes between merger and evaluation year above efficiency changes of non-merging banks. I assess the post-merger performance up to 11 years after the mergers and relate it to the transfer of skills, the adequacy to merge distressed banks and the role of geographical distance. Roughly every second merger is a success in terms of either CE or PE. The margin of success in terms of CE is narrow, as efficiency differentials between merging and non-merging banks are around 1 and 2 percentage points. PE performance is slightly larger. More importantly, mergers boost in particular the change in PE, thus indicating persistent improvements of merging banks to improve the ability to generate profits.
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Do Weak Supervisory Systems Encourage Bank Risk-taking?
Claudia M. Buch, G. DeLong
Journal of Financial Stability,
2008
Abstract
Weak bank supervision could give banks the ability to shift risk from themselves to supervisors. We use cross-border bank mergers as a natural experiment to test changes in risk and the impact of supervision. We examine cross-border bank mergers and find that the supervisory structures of the partners’ countries influence changes in post-merger total risk. An acquirer from a country with strong supervision lowers total risk after a cross-border merger. However, total risk increases when the target bank is located in a country with relatively strong supervision. This result is consistent with strong host regulators limiting the risky activities of their local banks. Foreign-owned competitors could then engage in the risky projects, especially if the foreign banks’ supervisors are not strong. An acquirer entering a country with strong supervision appears to shift risk back to its home country. The results suggest that bank supervisors can reduce total banking risk in their countries by being strong.
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Accounting for Distress in Bank Mergers
Michael Koetter, J. W. B. Bos, Frank Heid, James W. Kolari, Clemens J. M. Kool, Daniel Porath
Journal of Banking and Finance,
Nr. 10,
2007
Abstract
Most bank merger studies do not control for hidden bailouts, which may lead to biased results. In this study we employ a unique data set of approximately 1000 mergers to analyze the determinants of bank mergers. We use undisclosed information on banks’ regulatory intervention history to distinguish between distressed and non-distressed mergers. Among merging banks, we find that improving financial profiles lower the likelihood of distressed mergers more than the likelihood of non-distressed mergers. The likelihood to acquire a bank is also reduced but less than the probability to be acquired. Both distressed and non-distressed mergers have worse CAMEL profiles than non-merging banks. Hence, non-distressed mergers may be motivated by the desire to forestall serious future financial distress and prevent regulatory intervention.
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Does Post-Crisis Restructuring Decrease the Availability of Banking Services? The Case of Turkey
H. Evren Damar
Journal of Banking and Finance,
Nr. 9,
2007
Abstract
This study examines the relationship between post-crisis bank consolidation and the number of bank branches in Turkey. Using a unique data set, the analysis addresses several issues related to the impact of market characteristics on branching behavior. The findings suggest that sales of failed institutions by the central authority lead to branch closures in small and uncompetitive markets where the buyer does not have a prior presence. Contrary to popular belief, mergers between healthy institutions do not always cause a decrease in the number of branches; rather, they are shown to increase the availability of banking services in concentrated markets.
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Where enterprises lead, people follow? Links between migration and FDI in Germany
Claudia M. Buch, J. Kleinert, Farid Toubal
European Economic Review,
Nr. 8,
2006
Abstract
Standard neoclassical models of economic integration are based on the assumptions that capital and labor are substitutes and that the geography of factor market integration does not matter. Yet, these two assumptions are violated if agglomeration forces among factors from specific source countries are at work. Agglomeration implies that factors behave as complements and that the country of origin matters. This paper analyzes agglomeration between capital and labor empirically. We use state-level German data to answer the question whether and how migration and foreign direct investment (FDI) are linked. Stocks of inward FDI and of immigrants have similar determinants, and the geography of factor market integration matters. There are higher stocks of inward FDI in German states hosting a large foreign population from the same country of origin. This agglomeration effect is confined to higher-income source countries.
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