This study analyzes the motives and geographical structure of Finnish mergers and acquisitions (M&As) between 1989-2000 using a multilogit model. The study finds that characteristics indicating a firm's ability to monitor and internalize synergies, such as a highly educated workforce, increase the probability of acquiring a distant target, especially internationally. Having research and development (R&D) capital from investments also increases the likelihood of international acquisitions. For targets, having R&D capital increases the probability of being acquired across all categories but especially internationally. The study suggests factors like education and R&D abilities help firms overcome barriers to internalizing synergies from more distant M&As.
Workers co-determination and industrial productivityserena boccardo
This research proposal aims to explore the impact of codetermination, a form of corporate governance involving worker representation, on firm performance metrics like total factor productivity, efficiency, and growth. While previous research has found mixed results, the proposal will focus on analyzing codetermination's effects within the automotive industry using econometric techniques. The analysis is motivated by debates around balancing employee and shareholder interests through participation models and ensuring sustainable long-term growth.
Foreign ownership, domestic ownership and capital structure special reference...Alexander Decker
This document summarizes a study that examines the impact of foreign and domestic ownership on the capital structure of manufacturing companies listed on the Colombo Stock Exchange in Sri Lanka from 2009 to 2011. The study uses correlation, regression, and descriptive statistical analysis. The results show that foreign ownership has a strong positive correlation with leverage, while domestic ownership has a negative correlation with leverage. However, the regression model finds that ownership structure only explains 36% of the variation in leverage, which is not statistically significant. On average, foreign owners held 25% of shares while domestic owners held 69% of shares for the sample companies. The average leverage ratio was 40%, indicating debt comprised 40% of companies' capital on average.
This document summarizes a research article that develops models to explain how firm conduct and competitive interactions jointly influence risk-return relationships at the industry level. The models show that two main mechanisms impact risk-return relations: 1) firm conduct, including heterogeneity in firms' costs and imperfect control over operations, which leads to a negative risk-return effect, and 2) a "reflection effect" whereby a firm's actions impact its competitors' profits, leading to a positive risk-return effect that is dampened as the number of firms increases. By integrating considerations of both firm conduct and industry competition, the models offer novel predictions about when risk-return relations will be negative, positive, or U-shaped, providing a more nuanced understanding
Impact of corporate diversification on the market value of firmsAlexander Decker
This document summarizes a study that investigates the impact of diversification on the market value of banks in Nigeria. The study hypothesized that diversification does not significantly impact market value. Using regression analysis, the results rejected this null hypothesis and found that diversification does significantly impact market value of banks in Nigeria. Prior literature on the impact of diversification has shown mixed and inconclusive results. Some studies found diversification reduced firm value while others found no relationship or that diversification increased value. The document reviews these mixed findings from prior studies.
The paper examines the antecedents of intentions to quit, job search, and actual job switches during a five-year follow-up period. We use a representative random sample of all Finnish employees (N = 2800). The data both contain information on intentions to quit and on-the-job search from a cross-section survey and records employees’ actual job switches from longitudinal register data that can be linked to the survey. Specifically, we study the contribution of adverse working conditions (harms, hazards, uncertainty, physically and mentally heavy work), work organization (promotion prospects, discrimination, supervisor support) and ease-of-movement factors (mental health, wage level, regional unemployment). According to the estimates, adverse working conditions, poor promotions prospects, discrimination, poor supervisor support and mental health symptoms are positively related to unwillingly staying in a job, since these variables increase the probability of turnover intentions or job search but not actual job switches.
A study of selected manufacturing companies listed on colombo stock exchange ...Alexander Decker
This document summarizes a study that investigates factors that determine the profitability of selected
manufacturing companies listed on the Colombo Stock Exchange in Sri Lanka from 2008-2012. The study uses
multiple regression analysis to examine the relationship between independent variables like capital structure,
working capital, firm size, non-debt tax shield, growth rate and the dependent variable of profitability measured
by return on assets and return on equity. The results found that the independent variables explained 76.6% and
84.7% of the variance in profitability. Specifically, capital structure and non-debt tax shield had a statistically
significant positive impact on profitability, while working capital, growth rate and firm size did not
This document summarizes a research paper that examines how mimetic isomorphism and entrepreneurial orientation affect the likelihood of Australian wineries to internationalize. The study integrates institutional and entrepreneurship theories to analyze wineries' export intentions. It hypothesizes that mimetic isomorphism has a positive effect on export likelihood, while the effect of entrepreneurial orientation is contingent on institutional distance between home and host countries. An executive survey of Australian wineries was conducted to test these hypotheses. The results found mimetic isomorphism increased export likelihood, while the effect of entrepreneurial orientation was positive under high institutional distance but negative under low distance.
This document summarizes a research paper that investigates the relationship between stock liquidity and corporate cash holdings. The paper finds that firms with more liquid stocks hold less cash after controlling for other factors. To address endogeneity concerns, the paper uses decimalization in U.S. stock markets as an exogenous shock and still finds that increased stock liquidity leads firms to reduce cash holdings. The results suggest that stock liquidity decreases costs of raising capital and enhances corporate governance, leading firms to hold less precautionary cash.
Workers co-determination and industrial productivityserena boccardo
This research proposal aims to explore the impact of codetermination, a form of corporate governance involving worker representation, on firm performance metrics like total factor productivity, efficiency, and growth. While previous research has found mixed results, the proposal will focus on analyzing codetermination's effects within the automotive industry using econometric techniques. The analysis is motivated by debates around balancing employee and shareholder interests through participation models and ensuring sustainable long-term growth.
Foreign ownership, domestic ownership and capital structure special reference...Alexander Decker
This document summarizes a study that examines the impact of foreign and domestic ownership on the capital structure of manufacturing companies listed on the Colombo Stock Exchange in Sri Lanka from 2009 to 2011. The study uses correlation, regression, and descriptive statistical analysis. The results show that foreign ownership has a strong positive correlation with leverage, while domestic ownership has a negative correlation with leverage. However, the regression model finds that ownership structure only explains 36% of the variation in leverage, which is not statistically significant. On average, foreign owners held 25% of shares while domestic owners held 69% of shares for the sample companies. The average leverage ratio was 40%, indicating debt comprised 40% of companies' capital on average.
This document summarizes a research article that develops models to explain how firm conduct and competitive interactions jointly influence risk-return relationships at the industry level. The models show that two main mechanisms impact risk-return relations: 1) firm conduct, including heterogeneity in firms' costs and imperfect control over operations, which leads to a negative risk-return effect, and 2) a "reflection effect" whereby a firm's actions impact its competitors' profits, leading to a positive risk-return effect that is dampened as the number of firms increases. By integrating considerations of both firm conduct and industry competition, the models offer novel predictions about when risk-return relations will be negative, positive, or U-shaped, providing a more nuanced understanding
Impact of corporate diversification on the market value of firmsAlexander Decker
This document summarizes a study that investigates the impact of diversification on the market value of banks in Nigeria. The study hypothesized that diversification does not significantly impact market value. Using regression analysis, the results rejected this null hypothesis and found that diversification does significantly impact market value of banks in Nigeria. Prior literature on the impact of diversification has shown mixed and inconclusive results. Some studies found diversification reduced firm value while others found no relationship or that diversification increased value. The document reviews these mixed findings from prior studies.
The paper examines the antecedents of intentions to quit, job search, and actual job switches during a five-year follow-up period. We use a representative random sample of all Finnish employees (N = 2800). The data both contain information on intentions to quit and on-the-job search from a cross-section survey and records employees’ actual job switches from longitudinal register data that can be linked to the survey. Specifically, we study the contribution of adverse working conditions (harms, hazards, uncertainty, physically and mentally heavy work), work organization (promotion prospects, discrimination, supervisor support) and ease-of-movement factors (mental health, wage level, regional unemployment). According to the estimates, adverse working conditions, poor promotions prospects, discrimination, poor supervisor support and mental health symptoms are positively related to unwillingly staying in a job, since these variables increase the probability of turnover intentions or job search but not actual job switches.
A study of selected manufacturing companies listed on colombo stock exchange ...Alexander Decker
This document summarizes a study that investigates factors that determine the profitability of selected
manufacturing companies listed on the Colombo Stock Exchange in Sri Lanka from 2008-2012. The study uses
multiple regression analysis to examine the relationship between independent variables like capital structure,
working capital, firm size, non-debt tax shield, growth rate and the dependent variable of profitability measured
by return on assets and return on equity. The results found that the independent variables explained 76.6% and
84.7% of the variance in profitability. Specifically, capital structure and non-debt tax shield had a statistically
significant positive impact on profitability, while working capital, growth rate and firm size did not
This document summarizes a research paper that examines how mimetic isomorphism and entrepreneurial orientation affect the likelihood of Australian wineries to internationalize. The study integrates institutional and entrepreneurship theories to analyze wineries' export intentions. It hypothesizes that mimetic isomorphism has a positive effect on export likelihood, while the effect of entrepreneurial orientation is contingent on institutional distance between home and host countries. An executive survey of Australian wineries was conducted to test these hypotheses. The results found mimetic isomorphism increased export likelihood, while the effect of entrepreneurial orientation was positive under high institutional distance but negative under low distance.
This document summarizes a research paper that investigates the relationship between stock liquidity and corporate cash holdings. The paper finds that firms with more liquid stocks hold less cash after controlling for other factors. To address endogeneity concerns, the paper uses decimalization in U.S. stock markets as an exogenous shock and still finds that increased stock liquidity leads firms to reduce cash holdings. The results suggest that stock liquidity decreases costs of raising capital and enhances corporate governance, leading firms to hold less precautionary cash.
The Market’s Reaction to Corporate Diversification: What Deserves More Punish...RyanMHolcomb
The document summarizes a paper that examines whether the market rewards or punishes corporate diversification. It begins by reviewing relevant investment theory and prior studies. Lang and Stulz (1993) found a negative relationship between diversification and Tobin's Q, but the authors aim to examine if this relationship holds in 2009 using different diversification measures. They hypothesize firms will be "punished more" for unrelated diversification. The document defines key terms like the Herfindahl-Hirschman Index and Tobin's Q that will be used in the analysis. Prior literature presented mixed views on the costs and benefits of diversification.
Distress risk and stock returns in an emerging marketAlexander Decker
This research study examines the relationship between financial distress and stock returns of listed companies in Pakistan. The study uses Altman's Z-score model to measure distress risk and subsequent realized stock returns as a proxy for market performance. The sample includes 17 distressed and 17 non-distressed firms listed on the Karachi Stock Exchange between 2006-2011. The results found a positive but insignificant relationship between distress risk and stock returns for distressed firms, suggesting distress risk may be a systematic risk for the Pakistani stock market to some extent. For non-distressed firms, distress risk was negatively correlated with stock returns and this relationship was statistically significant. The study is inconclusive on whether distress risk explains stock returns in Pakistan.
This document summarizes a research paper that investigates the impact of stock market liquidity on firms' dividend payout policy in Australia. The study finds that stock liquidity positively relates to firm dividend payouts. To address endogeneity, the study uses the removal of broker identities by the ASX in 2005 as an exogenous shock to stock liquidity. The results suggest an increase in stock liquidity around this event led to an increase in firm dividend, suggesting a causal effect. The study also finds stock liquidity enhances dividends by reducing cash flow volatility, and the effect of liquidity is weaker for firms reporting imputation tax credits.
This document summarizes a study that examines the relationship between corruption and firm investment in Vietnam using survey data from Vietnamese small and medium enterprises. The study tests two hypotheses: that corruption hinders firm investment by increasing costs and promoting rent-seeking behaviors, or that corruption boosts investment by helping firms overcome bureaucratic obstacles. The study employs both a simple logistic regression model and a bivariate probit model with a corruption instrument variable to address potential endogeneity between corruption and investment. The results provide evidence that corruption hinders firm investment in Vietnam, which may partially explain the negative effect of corruption on firm performance found in previous research.
Transaction cost expenditures and the relative performance of mutual funds(13)bfmresearch
This document analyzes trading costs for a sample of 132 equity mutual funds between 1984 and 1991. It finds that trading costs, including spread costs and brokerage commissions, average 0.78% of fund assets per year and vary substantially across funds. Higher trading costs are negatively associated with fund returns, even after controlling for expense ratios. Turnover explains some but not all of the variation in trading costs. Fund investment objectives are related to average trading costs but variation within objectives is greater than across objectives.
This study examines how stock liquidity affects corporate risk-taking using China's split share structure reform as a natural experiment. The reform increased stock liquidity by eliminating restrictions on trading shares. The study finds that higher stock liquidity leads to increased corporate risk-taking through two channels: 1) lower costs of capital, as liquidity reduces investment risk and transaction costs, making firms less financially constrained and more tolerant of risky projects, and 2) higher pay-for-performance sensitivity of managers, as liquidity shifts compensation toward stock-based, incentivizing riskier strategies that may boost stock prices. The results provide evidence that capital market development can stimulate long-term economic growth by encouraging appropriate risk-taking.
Determinants of capital structure of listed textile enterprises of bangladeshAlexander Decker
This document summarizes a research study on the determinants of capital structure for listed textile enterprises in Bangladesh. The study uses panel data and a fixed-effect model to examine the relationship between leverage and firm-specific factors like profitability, tangibility, size, and growth. The results found that profitability and tangibility were statistically significant determinants of leverage. This finding is consistent with both the trade-off theory and agency cost theory of capital structure. The document also reviews various capital structure theories and how they relate to different firm-specific determinants.
We analyse age segregation in hirings and separations using linked employer-employee data from Finland in the period 1990-2004. This allows us to identify at the firm level employees in different age groups that have been hired during the previous year, and employees who have exited the firms.
We analyze firm-level age segregation using segregation curves and Gini indices. The main result is that hirings of older employees have clearly been more segregated than exits or the stock of old employees even though hirings have become slightly less segregated towards the end of the period
in question. At the same time age segregation in exits and stocks has increased and these trends are not sensitive to small unit bias in measurement. We also examine trends in hiring and exit rates using aggregate data. According to our results the oldest age group is again underrepresented in
hirings. There is a positive upward trend in their recruitments related to the increasing cohort size, but it is much weaker than the trend in the relative share of older workers in employment. The exit rate of the older employees indicates cyclical variation while the small number of hirings seems to
be insensitive to changing labour demand. We present a decomposition of employment change by age group and with that decomposition we disentangle the role of hirings and exits from factors related to demographics and cohort effects. The latter factors include the effect of the large babyboom
generation entering the age group of older employees with higher employment rates than earlier cohorts. Finally, our regression analysis shows that larger firms are more likely to hire older employees, but their hiring rates are lower.
Event study on the impact of mergers and acquisitionseleclasson
This document provides details on an event study examining the impact of mergers and acquisitions on stock returns. It includes a literature review on motives for acquisitions and prior empirical evidence. The study analyzes acquisitions by UK firms of domestic UK targets and cross-border EU targets from 2006-2010. The methodology section outlines using an event study approach with a 3-day event window around acquisition announcements and 200-day estimation period to calculate abnormal returns. Hypotheses test for no abnormal returns for acquirers and differences between domestic and cross-border deals.
This paper explores the effects of outsourcing on employee well-being through the use of the Finnish linked employer-employee data. The direct negative effect of outsourcing is attributable to greater job destruction and worker outflow. In terms of perceived well-being, the winners in international outsourcing are those who are capable of performing interactive tasks (i.e., managers, professionals and experts), especially when offshoring involves closer connections to other developed countries.
Event Study: Market Reactions to New CEO AnnouncementZhuting Meng
- The document analyzes stock market reactions to announcements of new CEOs for 50 US listed companies over 5 years. It finds an average cumulative abnormal return of 1.5% around the announcement dates, indicating market movement with 93.74% certainty.
- It examines factors like past company performance, size, CEO characteristics, and internal vs. external appointments to explain differences in market reactions. Subgroup analyses are conducted based on past performance and voluntary vs. forced departures.
- The results suggest markets react differently to internal vs. external CEO nominations, especially when past performance was poor and departure was forced, or performance was good and departure was voluntary.
The Relationship Between Firm Investment and Financial StatusSudarshan Kadariya
This document summarizes a study that examined the relationship between firm investment and financial status using a sample of 1,317 public firms between 1987-1994. The study found that:
1) Firms classified as facing fewer financial constraints (NFC) had stronger financial ratios and investment sensitivity to cash flow compared to financially constrained (FC) firms.
2) Investment levels were more sensitive to internal cash flow for NFC firms compared to partially financially constrained and FC firms.
3) The study validated prior research finding that investment decisions of more creditworthy firms are more sensitive to internal funds availability.
This document summarizes a study on the relationship between firm investment and financial status. The study uses a sample of 1,317 firms from 1987 to 1994 to examine how investment decisions differ across financially constrained and unconstrained firms. It finds that investment is most sensitive to internal funds for firms that are least financially constrained, consistent with the findings of Kaplan and Zingales (1997). Statistical tests show this difference is statistically significant. Additionally, firms that reduced dividends exhibited traditional signs of greater financial constraints such as lower current ratios and profitability compared to firms that increased dividends. The study uses multiple discriminant analysis and regression analysis to classify firms and compare investment-cash flow sensitivities between financially constrained and unconstrained groups.
This study analyses a baseline dataset collected for an evaluation of a co-operation project that assists trade unions in Zambia to boost their activities. The data were collected from 51 establishments to study attitudes towards unions, working conditions and the views of employers and trade union representatives on each other. The results show that employees have, by and large, positive views on unions but turning to unions when there are problems is not particularly common. Wages are often considered to be too low and assumed to be lower than those of similar individuals elsewhere or even in the same establishment. Regression analysis shows that having positive views on unions per se has a positive association with satisfaction and negative correlation with resign intentions. Union membership, however, seems to be correlated with employees being more discontent with their wages in some instances, though the direction of causality is unclear. Union membership seems to be associated with higher awareness of malpractices.
This document summarizes several studies on capital structure that were conducted between 1982 and 2009. The studies examined factors that influence a firm's capital structure decisions, such as profitability, growth opportunities, firm size, asset composition, and country-specific institutional factors. The studies generally found support for theories like the pecking order theory and trade-off theory in explaining capital structure choices. For example, more profitable firms tended to rely more on internal financing rather than debt, while firm size and asset composition influenced target debt levels. However, the studies also found that capital structure decisions are impacted by firm-specific and country-level institutional differences.
This document summarizes several studies on capital structure and the determinants of a firm's capital structure. It discusses five empirical studies conducted between 1982-2004 that analyzed factors like firm size, growth opportunities, profitability, and country-level institutional differences that influence whether firms use more debt or equity in their capital structure. The studies found support for theories like the pecking order theory and trade-off theory in determining capital structure. Overall, the document reviews literature on capital structure theories and empirical evidence on how various firm characteristics and country-level factors impact capital structure decisions.
Dilemma theory and path to cross cultural hrm synergy within multinational firmsAlexander Decker
This document discusses the dilemma that multinational companies face in managing human resources across borders. MNCs must balance integrating subsidiaries globally with parent company practices, while also responding to local conditions in host countries. This is known as the local responsiveness vs global integration dilemma. The author uses dilemma theory to analyze how MNCs navigate transferring HR practices between countries. While both local responsiveness and global integration are important, the author argues that local responsiveness is a bigger concern for overseas subsidiaries due to differing cultural, economic and legal environments. MNCs attempt to build synergy between these two extremes through various strategic options like ethnocentric, polycentric and global approaches to HR.
Entrepreneurial Views of Competitive StrategyKivanc Ozuolmez
The document discusses entrepreneurial views of competitive strategy compared to traditional positioning and resource-based views. It summarizes several articles that look more closely at the internal workings of firms and how value is created. Specifically, it discusses how these views examine rent appropriation within firms, new definitions of performance, sources of value creation like talent and innovation, and the importance of disequilibrium in the market. Overall, the entrepreneurial views presented provide a more detailed perspective of the internal firm processes that can explain performance differences between companies.
Measurement of tact necessary to prevent industrial disputes leading to loss ...IAEME Publication
This document summarizes an article from the International Journal of Management that examines measuring the level of tact necessary to prevent industrial disputes in South Bengal, India. The study collected data from five sample industries and analyzed it both manually and electronically. The hypothesis considers routes to resolution such as conciliation, mediation, arbitration, and intervention. The findings indicate management of tact has a functional relationship with factors like motivation/demotivation of employers, employees, and union leaders, as well as individual and organizational factors applicable to them.
The document outlines a strategic deployment planning process with three levels: a long-term strategic vision set by the CEO on a 10+ year horizon; a strategic plan set by the CEO and executives on a 5+ year horizon to achieve the vision through goals, objectives and action steps; and a tactical operational plan set by managers on a 1-12 month horizon to support the strategic plan.
The document outlines the future road map and activities of the E-Cell at NEN BCET. It plans to actively recruit mentors from alumni entrepreneurs, faculty, and professionals. It will form an advisory body of lawyers, accountants, investors, and bankers. E-Cell will organize talks, workshops on developing small businesses. It will participate in other institutes' E-cell events and organize its own. The document details marketing, maintaining a website, publishing newsletters, and compiling entrepreneur stories. It structures the E-Cell with coordinators, mentors, faculty leaders, and managers for events, corporate relations, media, web development, and sponsorships.
Bb on Tour 2016 | Innovation and Your Institution (Part 2) – Learn Roadmap Blackboard APAC
This document provides an agenda and overview for a session on innovation and an institution's teaching and learning roadmap. The agenda includes discussions of the Blackboard Learn 9.1 teaching and learning roadmap, hosting and support updates, next generation cloud deployment, and the next generation Blackboard Learn SaaS with Ultra Experience. The overview sections provide details on the Learn 9.1 release schedule and support cadence, upcoming quality and feature improvements to Learn and Collaborate, and roadmaps for other Blackboard products including the Bb Student app. Customer support statistics are also presented, along with information on countering distributed denial of service attacks.
The Market’s Reaction to Corporate Diversification: What Deserves More Punish...RyanMHolcomb
The document summarizes a paper that examines whether the market rewards or punishes corporate diversification. It begins by reviewing relevant investment theory and prior studies. Lang and Stulz (1993) found a negative relationship between diversification and Tobin's Q, but the authors aim to examine if this relationship holds in 2009 using different diversification measures. They hypothesize firms will be "punished more" for unrelated diversification. The document defines key terms like the Herfindahl-Hirschman Index and Tobin's Q that will be used in the analysis. Prior literature presented mixed views on the costs and benefits of diversification.
Distress risk and stock returns in an emerging marketAlexander Decker
This research study examines the relationship between financial distress and stock returns of listed companies in Pakistan. The study uses Altman's Z-score model to measure distress risk and subsequent realized stock returns as a proxy for market performance. The sample includes 17 distressed and 17 non-distressed firms listed on the Karachi Stock Exchange between 2006-2011. The results found a positive but insignificant relationship between distress risk and stock returns for distressed firms, suggesting distress risk may be a systematic risk for the Pakistani stock market to some extent. For non-distressed firms, distress risk was negatively correlated with stock returns and this relationship was statistically significant. The study is inconclusive on whether distress risk explains stock returns in Pakistan.
This document summarizes a research paper that investigates the impact of stock market liquidity on firms' dividend payout policy in Australia. The study finds that stock liquidity positively relates to firm dividend payouts. To address endogeneity, the study uses the removal of broker identities by the ASX in 2005 as an exogenous shock to stock liquidity. The results suggest an increase in stock liquidity around this event led to an increase in firm dividend, suggesting a causal effect. The study also finds stock liquidity enhances dividends by reducing cash flow volatility, and the effect of liquidity is weaker for firms reporting imputation tax credits.
This document summarizes a study that examines the relationship between corruption and firm investment in Vietnam using survey data from Vietnamese small and medium enterprises. The study tests two hypotheses: that corruption hinders firm investment by increasing costs and promoting rent-seeking behaviors, or that corruption boosts investment by helping firms overcome bureaucratic obstacles. The study employs both a simple logistic regression model and a bivariate probit model with a corruption instrument variable to address potential endogeneity between corruption and investment. The results provide evidence that corruption hinders firm investment in Vietnam, which may partially explain the negative effect of corruption on firm performance found in previous research.
Transaction cost expenditures and the relative performance of mutual funds(13)bfmresearch
This document analyzes trading costs for a sample of 132 equity mutual funds between 1984 and 1991. It finds that trading costs, including spread costs and brokerage commissions, average 0.78% of fund assets per year and vary substantially across funds. Higher trading costs are negatively associated with fund returns, even after controlling for expense ratios. Turnover explains some but not all of the variation in trading costs. Fund investment objectives are related to average trading costs but variation within objectives is greater than across objectives.
This study examines how stock liquidity affects corporate risk-taking using China's split share structure reform as a natural experiment. The reform increased stock liquidity by eliminating restrictions on trading shares. The study finds that higher stock liquidity leads to increased corporate risk-taking through two channels: 1) lower costs of capital, as liquidity reduces investment risk and transaction costs, making firms less financially constrained and more tolerant of risky projects, and 2) higher pay-for-performance sensitivity of managers, as liquidity shifts compensation toward stock-based, incentivizing riskier strategies that may boost stock prices. The results provide evidence that capital market development can stimulate long-term economic growth by encouraging appropriate risk-taking.
Determinants of capital structure of listed textile enterprises of bangladeshAlexander Decker
This document summarizes a research study on the determinants of capital structure for listed textile enterprises in Bangladesh. The study uses panel data and a fixed-effect model to examine the relationship between leverage and firm-specific factors like profitability, tangibility, size, and growth. The results found that profitability and tangibility were statistically significant determinants of leverage. This finding is consistent with both the trade-off theory and agency cost theory of capital structure. The document also reviews various capital structure theories and how they relate to different firm-specific determinants.
We analyse age segregation in hirings and separations using linked employer-employee data from Finland in the period 1990-2004. This allows us to identify at the firm level employees in different age groups that have been hired during the previous year, and employees who have exited the firms.
We analyze firm-level age segregation using segregation curves and Gini indices. The main result is that hirings of older employees have clearly been more segregated than exits or the stock of old employees even though hirings have become slightly less segregated towards the end of the period
in question. At the same time age segregation in exits and stocks has increased and these trends are not sensitive to small unit bias in measurement. We also examine trends in hiring and exit rates using aggregate data. According to our results the oldest age group is again underrepresented in
hirings. There is a positive upward trend in their recruitments related to the increasing cohort size, but it is much weaker than the trend in the relative share of older workers in employment. The exit rate of the older employees indicates cyclical variation while the small number of hirings seems to
be insensitive to changing labour demand. We present a decomposition of employment change by age group and with that decomposition we disentangle the role of hirings and exits from factors related to demographics and cohort effects. The latter factors include the effect of the large babyboom
generation entering the age group of older employees with higher employment rates than earlier cohorts. Finally, our regression analysis shows that larger firms are more likely to hire older employees, but their hiring rates are lower.
Event study on the impact of mergers and acquisitionseleclasson
This document provides details on an event study examining the impact of mergers and acquisitions on stock returns. It includes a literature review on motives for acquisitions and prior empirical evidence. The study analyzes acquisitions by UK firms of domestic UK targets and cross-border EU targets from 2006-2010. The methodology section outlines using an event study approach with a 3-day event window around acquisition announcements and 200-day estimation period to calculate abnormal returns. Hypotheses test for no abnormal returns for acquirers and differences between domestic and cross-border deals.
This paper explores the effects of outsourcing on employee well-being through the use of the Finnish linked employer-employee data. The direct negative effect of outsourcing is attributable to greater job destruction and worker outflow. In terms of perceived well-being, the winners in international outsourcing are those who are capable of performing interactive tasks (i.e., managers, professionals and experts), especially when offshoring involves closer connections to other developed countries.
Event Study: Market Reactions to New CEO AnnouncementZhuting Meng
- The document analyzes stock market reactions to announcements of new CEOs for 50 US listed companies over 5 years. It finds an average cumulative abnormal return of 1.5% around the announcement dates, indicating market movement with 93.74% certainty.
- It examines factors like past company performance, size, CEO characteristics, and internal vs. external appointments to explain differences in market reactions. Subgroup analyses are conducted based on past performance and voluntary vs. forced departures.
- The results suggest markets react differently to internal vs. external CEO nominations, especially when past performance was poor and departure was forced, or performance was good and departure was voluntary.
The Relationship Between Firm Investment and Financial StatusSudarshan Kadariya
This document summarizes a study that examined the relationship between firm investment and financial status using a sample of 1,317 public firms between 1987-1994. The study found that:
1) Firms classified as facing fewer financial constraints (NFC) had stronger financial ratios and investment sensitivity to cash flow compared to financially constrained (FC) firms.
2) Investment levels were more sensitive to internal cash flow for NFC firms compared to partially financially constrained and FC firms.
3) The study validated prior research finding that investment decisions of more creditworthy firms are more sensitive to internal funds availability.
This document summarizes a study on the relationship between firm investment and financial status. The study uses a sample of 1,317 firms from 1987 to 1994 to examine how investment decisions differ across financially constrained and unconstrained firms. It finds that investment is most sensitive to internal funds for firms that are least financially constrained, consistent with the findings of Kaplan and Zingales (1997). Statistical tests show this difference is statistically significant. Additionally, firms that reduced dividends exhibited traditional signs of greater financial constraints such as lower current ratios and profitability compared to firms that increased dividends. The study uses multiple discriminant analysis and regression analysis to classify firms and compare investment-cash flow sensitivities between financially constrained and unconstrained groups.
This study analyses a baseline dataset collected for an evaluation of a co-operation project that assists trade unions in Zambia to boost their activities. The data were collected from 51 establishments to study attitudes towards unions, working conditions and the views of employers and trade union representatives on each other. The results show that employees have, by and large, positive views on unions but turning to unions when there are problems is not particularly common. Wages are often considered to be too low and assumed to be lower than those of similar individuals elsewhere or even in the same establishment. Regression analysis shows that having positive views on unions per se has a positive association with satisfaction and negative correlation with resign intentions. Union membership, however, seems to be correlated with employees being more discontent with their wages in some instances, though the direction of causality is unclear. Union membership seems to be associated with higher awareness of malpractices.
This document summarizes several studies on capital structure that were conducted between 1982 and 2009. The studies examined factors that influence a firm's capital structure decisions, such as profitability, growth opportunities, firm size, asset composition, and country-specific institutional factors. The studies generally found support for theories like the pecking order theory and trade-off theory in explaining capital structure choices. For example, more profitable firms tended to rely more on internal financing rather than debt, while firm size and asset composition influenced target debt levels. However, the studies also found that capital structure decisions are impacted by firm-specific and country-level institutional differences.
This document summarizes several studies on capital structure and the determinants of a firm's capital structure. It discusses five empirical studies conducted between 1982-2004 that analyzed factors like firm size, growth opportunities, profitability, and country-level institutional differences that influence whether firms use more debt or equity in their capital structure. The studies found support for theories like the pecking order theory and trade-off theory in determining capital structure. Overall, the document reviews literature on capital structure theories and empirical evidence on how various firm characteristics and country-level factors impact capital structure decisions.
Dilemma theory and path to cross cultural hrm synergy within multinational firmsAlexander Decker
This document discusses the dilemma that multinational companies face in managing human resources across borders. MNCs must balance integrating subsidiaries globally with parent company practices, while also responding to local conditions in host countries. This is known as the local responsiveness vs global integration dilemma. The author uses dilemma theory to analyze how MNCs navigate transferring HR practices between countries. While both local responsiveness and global integration are important, the author argues that local responsiveness is a bigger concern for overseas subsidiaries due to differing cultural, economic and legal environments. MNCs attempt to build synergy between these two extremes through various strategic options like ethnocentric, polycentric and global approaches to HR.
Entrepreneurial Views of Competitive StrategyKivanc Ozuolmez
The document discusses entrepreneurial views of competitive strategy compared to traditional positioning and resource-based views. It summarizes several articles that look more closely at the internal workings of firms and how value is created. Specifically, it discusses how these views examine rent appropriation within firms, new definitions of performance, sources of value creation like talent and innovation, and the importance of disequilibrium in the market. Overall, the entrepreneurial views presented provide a more detailed perspective of the internal firm processes that can explain performance differences between companies.
Measurement of tact necessary to prevent industrial disputes leading to loss ...IAEME Publication
This document summarizes an article from the International Journal of Management that examines measuring the level of tact necessary to prevent industrial disputes in South Bengal, India. The study collected data from five sample industries and analyzed it both manually and electronically. The hypothesis considers routes to resolution such as conciliation, mediation, arbitration, and intervention. The findings indicate management of tact has a functional relationship with factors like motivation/demotivation of employers, employees, and union leaders, as well as individual and organizational factors applicable to them.
The document outlines a strategic deployment planning process with three levels: a long-term strategic vision set by the CEO on a 10+ year horizon; a strategic plan set by the CEO and executives on a 5+ year horizon to achieve the vision through goals, objectives and action steps; and a tactical operational plan set by managers on a 1-12 month horizon to support the strategic plan.
The document outlines the future road map and activities of the E-Cell at NEN BCET. It plans to actively recruit mentors from alumni entrepreneurs, faculty, and professionals. It will form an advisory body of lawyers, accountants, investors, and bankers. E-Cell will organize talks, workshops on developing small businesses. It will participate in other institutes' E-cell events and organize its own. The document details marketing, maintaining a website, publishing newsletters, and compiling entrepreneur stories. It structures the E-Cell with coordinators, mentors, faculty leaders, and managers for events, corporate relations, media, web development, and sponsorships.
Bb on Tour 2016 | Innovation and Your Institution (Part 2) – Learn Roadmap Blackboard APAC
This document provides an agenda and overview for a session on innovation and an institution's teaching and learning roadmap. The agenda includes discussions of the Blackboard Learn 9.1 teaching and learning roadmap, hosting and support updates, next generation cloud deployment, and the next generation Blackboard Learn SaaS with Ultra Experience. The overview sections provide details on the Learn 9.1 release schedule and support cadence, upcoming quality and feature improvements to Learn and Collaborate, and roadmaps for other Blackboard products including the Bb Student app. Customer support statistics are also presented, along with information on countering distributed denial of service attacks.
The document provides information about entrepreneurship and the entrepreneurial journey of E. Sarathbabu, founder and CEO of Foodking. It discusses the challenges he faced in his childhood and college days, and his thought process behind starting a new venture in the food sector. It summarizes Foodking's current operations with 180 employees across outlets, and its strategy for cost leadership and franchise expansion to 10 major cities in India within 5 years. The document also defines entrepreneurship and small business ownership and discusses the personality traits and opportunities that make an entrepreneur.
Road Map for Organizational Effectivenesstdhooper2
The document provides an overview of the services offered by Leadership Strategy Group to help organizations, teams, and individuals improve leadership effectiveness and drive organizational performance. The services include change management, employee engagement, team performance, and leadership development. Key practices involve assessment, action planning, facilitation, coaching, and measuring results. Case studies demonstrate how clients achieved goals like cost reduction, improved processes, and increased employee engagement.
This thought leadership paper is designed to help businesses to successfully navigate challenging issues.
The report is divided into three key areas:
• Planning for expansion
• Choosing your location
• Conducting business overseas.
http://www.charteredaccountants.com.au
This paper uses panel data from 1989 to 1995 on blue-collar workers in Finnish manufacturing industries and their establishments to assess the extent to which hours of work are affected by individual or establishment characteristics – observed as well as unobserved. We argue that the recent research on hours of work has focused almost exclusively on the supply of labor, but that insights into the extent to which hours variation is driven not by supply but by demand will affect the likelihood that supply-side policies will succeed to overcome the high European unemployment trap. Our estimates show that establishment level variation is almost as important as that on the individual level in the total variation of hours. This suggests that at least part of the variation of hours is driven by demand.
This document summarizes a study on mergers and acquisitions in Finland between 1994-1999. The study analyzes factors that influence mergers and acquisitions, with a focus on new technology production and use. It empirically tests whether a firm's R&D investments affect the likelihood of a merger or acquisition from both the acquiring and acquired firm perspectives. A key finding is that R&D investments increase the probability that a firm will acquire another firm, showing firms do not specialize in either producing technology internally or buying it externally. R&D also increases the likelihood a firm will be acquired, though this only applies outside of process industries. The study suggests mergers and acquisitions can be an efficient way to transfer knowledge between
In this study we analyse ownership changes as a means to transfer technology. More closely, we empirically test whether the possession of innovations affects the likelihood that a firm is acquired or that it acquires another firm.
This study considers the impact of M&As on a firm’s R&D investments. We have analysed the impacts of the incidences in which a firm becomes a target and, on the other hand, an acquirer. M&As are classified in our study as being either domestic or cross-border. In addition, domestic M&As are classified – if needed – according to geographical and technological proximity. The results obtained show that M&As tend to increase acquirers’ R&D investments, and decrease targets’ R&D investments or keep them unchanged. The clearest positive effect is related to the incidence in which a Finnish firm buys a foreign firm. On the other hand, when a foreign firm buys a Finnish firm, the impact is zero.
This study explores domestic inter-regional merger flows. Theoretical considerations based on monitoring are developed. The empirical part of the study is based on the comprehensive public data on domestic mergers and acquisitions that is matched to the micro-level data sources maintained by Statistics Finland in order to obtain several variables that help to characterize the companies involved. The Finnish evidence reveals that geographical closeness matters a great deal for inter-regional merger flows. This means that a great number of domestic mergers occur within narrowly defined regions. Domestic merger flows substantially reinforce the coreperiphery dimension. The most important finding from matched data is that the strong ability by an acquiring company to monitor the target (measured by the knowledge embodied in human capital) is able to support mergers that occur across distant locations, other things being equal. Geographical closeness and proximity across industries are not related, based on the Finnish evidence.
Comparisons of Foreign Multinationals and Local Firms in Asian Manufacturing...Nicha Tatsaneeyapan
This document summarizes a paper that compares economic characteristics of foreign multinational corporations (MNCs) and local firms in five Asian countries over time. The paper finds that foreign MNCs generally had larger shares of exports but smaller shares of employment and production compared to local firms. Foreign MNCs also tended to have higher labor productivity, capital productivity, capital intensity, profit rates, and import/export levels. Differences between wholly foreign and partially foreign firms, and between MNCs from different home countries, were also statistically significant in many cases. The paper aims to provide a quantitative analysis of differences between foreign and local firms in Asian manufacturing over time.
Comparisons of Foreign Multinationals and Local Firms in Asian Manufacturing...Nicha Tatsaneeyapan
This document summarizes a paper that compares economic characteristics of foreign multinational corporations (MNCs) and local firms in five Asian countries over time. The paper finds that foreign MNCs generally had larger shares of exports but smaller shares of employment and production compared to local firms. Foreign MNCs also tended to have higher labor productivity, capital productivity, capital intensity, profit rates, and import/export levels. Differences between wholly foreign and partially foreign firms, and between MNCs from different home countries, were also statistically significant in many cases. The paper aims to provide a quantitative analysis of differences between foreign and local firms in Asian manufacturing over time.
Plan sponsors hire and fire investment management firms to manage retirement plan assets totaling $6.3 trillion. The study examines the hiring and firing decisions of 3,400 plan sponsors between 1994-2003. It finds that plan sponsors hire managers after periods of strong excess returns, but these returns do not continue afterward. Managers are terminated for various reasons, including but not limited to underperformance, and excess returns after firings are indistinguishable from zero. When comparing returns from fired vs. newly hired managers, staying with fired managers would have yielded similar returns. Hiring and firing patterns vary based on plan sponsor characteristics.
This document presents a research model exploring the relationships between geographic scope, product diversification, proprietary assets, and corporate performance of Japanese firms. The model incorporates both antecedents and consequences of geographic scope. Six main hypotheses are developed: 1) Industry profitability is negatively related to product diversification. 2) Product diversification is negatively related to firm performance. 3) Product diversification is negatively related to R&D and advertising intensity. 4) R&D and advertising intensity are positively related to geographic scope. 5) Geographic scope is positively related to firm performance. 6) R&D and advertising intensity are positively related to firm performance. The model will be tested using data on 399 Japanese manufacturing firms.
The document discusses internalization theory, which explains why firms expand abroad through foreign direct investment rather than exporting or licensing. It explores how internalization can help firms reduce transaction costs and better exploit firm-specific advantages in knowledge and technology. Wholly owned subsidiaries allow firms to internalize markets and control valuable information, though cultural and institutional differences across countries can increase costs. Licensing also has drawbacks like high transaction costs and potential loss of competitive advantages. Overall, internalization theory holds that firms will internalize activities abroad when the benefits of controlling resources and capabilities outweigh the costs of international expansion.
This document discusses managing international mergers and acquisitions. It begins by noting that while international M&As are frequently used for foreign investment, most transactions fail to achieve objectives. The paper then proposes a framework suggesting cultural combination during post-acquisition integration is key to performance. Specifically, it argues cultural due diligence, cross-cultural communication, connection, and control can determine successful cultural blending and thereby impact acquisition results.
Tutkimuksessa tarkastellaan ammattirakenteiden polarisaatiota sekä yrityksissä että yritysrakenteiden muutoksen välityksellä. Aineistona käytetään Suomen yritys-työntekijäaineistoja, jotka ulottuvat pitkälle aikavälille ja kattavat suuren osan yrityksistä. Ammattirakenteiden polarisaatio on jatkunut Suomessa jo vuosikymmeniä. Keskitason tuotantotehtäviä ja toimistotehtäviä sisältävien ammattien osuus on pienentynyt. Samaan aikaan matalan osaamistason palveluammattien ja korkean osaamistason erityisasiantuntija-ammattien osuus on puolestaan ollut kasvussa. Kehityskulut ovat tapahtuneet osin jatkavien yritysten sisällä, mutta osin myös yritysten välillä tapahtuneiden rakennemuutosten kautta. Osa polarisaatiosta johtuu siitä, että kasvavien yritysten ammattirakenteet poikkeavat pienentyvien yritysten ammattirakenteista sekä siitä, että uusien yritysten ammattirakenteet poikkeavat poistuvien yritysten rakenteista. Palveluammattien osuutta on kasvattanut se, että uusissa yrityksissä palveluammattien osuus on ollut suuri ja poistuvissa yrityksissä pieni. Toisaalta palveluammattien osuus on kasvanut myös jatkavissa yrityksissä. Erilaisia keskitason rutiinitehtäviä on kadonnut sekä yritysten sisällä että yritysten vaihtuvuuden kautta. Sen sijaan korkean osaamistason ammattien osuuden kasvu selittyy ennen kaikkea yrityksien sisällä tapahtuneiden muutosten kautta. Jatkavissa yrityksissä tapahtunut ammattirakenteiden muutos on kytkeytynyt sekä tavaroiden ja palveluiden ulkomaankauppaan että tehtävien ulkoistamiseen maasta. Paljon T&K:hon panostavat ja ICT:tä käyttävät yritykset vähentävät tuotantotyöntekijöitä.
The literature review draws on the mainstream corporate governance literature in finance as its base and highlights the differences in motives between real estate and non-real estate related merger activity.
The document summarizes the key risks and rewards of IT outsourcing and insourcing based on a review of 10 pieces of literature. For outsourcing, the primary risk identified is contract/trust issues, while the primary reward is reduced costs. For insourcing, complacency and resistance to cost reduction are key risks, while lower costs and improved service levels are rewards. Selective sourcing is presented as a better alternative to minimize risks compared to total insourcing or outsourcing.
This paper analyses the employment effects of mergers and acquisitions (M&As) by using matched establishment-level data from Finland over the period 1989–2003. The data covers all sectors. We compare the employment effects of cross-border M&As with the effects arising from two different types of domestic M&As and internal restructurings. The results reveal that cross-border M&As lead to downsizing in manufacturing employment. The effects of cross-border M&As on employment in nonmanufacturing are much weaker. Changes in ownership associated with domestic M&As and internal restructurings also typically cause employment losses, but they exhibit an interesting sectoral variation.
Franz tödtling: Knowledge sourcing and innovation in austrian ict companiesMOC2010
This document discusses a study on knowledge sourcing and innovation in Austrian ICT companies. It examines how the location of companies (type of regional innovation system) influences their pattern of knowledge sourcing and innovation performance. The study analyzes data from 110 ICT companies in three Austrian regions. It finds that both internal knowledge and external knowledge from various sources, including R&D cooperation, influence company innovativeness. Location in a "thick" regional innovation system is also identified as a key determinant of innovation in the knowledge-intensive ICT sector.
This document provides an overview of corporate diversification and financial performance. It discusses various definitions and types of diversification, including related vs. unrelated diversification and internal development vs. mergers and acquisitions. The main theories for why firms diversify are also examined, including agency theory, free cash flow theory, efficiency theory, resource-based theory, and market power theory. Several studies on diversification in both developed and developing countries are summarized. The document concludes with a brief overview of Aditya Birla Nuvo, an Indian conglomerate operating across multiple industries and countries.
This document discusses foreign outsourcing and offshoring among multinational enterprises in Nigeria. It explores the concepts and theories of foreign outsourcing and offshoring, including transaction cost economics theory, core competency theory, and agency theory. The document concludes that foreign outsourcing and offshoring can provide benefits (blessings) like reduced costs, but may also have drawbacks (curses) such as job losses. Future research should include more participants and sectors to generalize findings.
Similar to On the Motives and Geographical Structure of Finnish Mergers and Acquisitions (20)
Talous & Yhteiskunta -lehden numero 4/2019 sisältää artikkeleita ja haastattelun, jotka kertovat alueellista keskittymistä käsitelleistä tutkimuksista. Suomen seitsemän suurimman kaupunkiseudun väestö kasvaa nopeimmin, kun taas pienempien kaupunkien ja maaseudun väestöosuus supistuu. Muutos on kuitenkin verrattain hidasta, ja sille on myös vastavoimia.
Talous & Yhteiskunta -lehden numeron 3/2019 teemana on työ ja terveys. Artikkeleissa tarkastellaan Suomen terveydenhuoltojärjestelmän toimivuutta ja pohditaan mitä voitaisiin oppia Ruotsissa jo tehdyistä terveydenhuollon uudistuksista. Muissa artikkeleissa käsitellään terveyskäyttäytymisen ja työmarkkinamenestyksen yhteyttä, työttömien aktivointia, työikäisten eritasoisia terveyspalveluja, työaikajoustojen vaikutusta terveyteen sekä informaatioteknologian ja tekoälyn käyttöä mielenterveyspalvelujen tukena. Haastateltavana on THL:n tutkimusprofessori Unto Häkkinen. Hänen mielestään sote-uudistus on tehtävä, vaikka se vaatiikin vielä monen yksityiskohdan ratkaisemista.
Opiskelijavalinta ylioppilaskirjoitusten nykyarvosanojen perusteella ei ole täysin perusteltua, todetaan Aalto-ylipiston ja Palkansaajien tutkimuslaitoksen uudessa tutkimuksessa. Ylioppilaskirjoitusten arvosanoilla on pitkän ajan vaikutuksia. Hienojakoisempi arvosteluasteikko tekisi opiskelijavalinnasta nykyistä reilumman.
Esimerkkiperhelaskelmissa tarkastellaan seitsemää kotitaloutta. Laskelmat kuvaavat ansiotulojen, tulonsiirtojen sekä verojen ja veronluonteisten maksujen kehityksen vaikutusta perheiden ostovoimaan. Perheille lasketaan Tilastokeskuksen tietoihin perustuvat perhekohtaiset kulutuskorit, jotka mahdollistavat perhekohtaisten inflaatiovauhtien ja reaalitulokehitysten arvioinnin. Ensi vuonna eläkeläispariskunnan ostovoima kasvaa eniten ja työttömien vähiten. Esimerkkiperhelaskelmia on tehty Palkansaajien tutkimuslaitoksella vuodesta 2009 lähtien.
Palkansaajien tutkimuslaitos ennustaa Suomen talouskasvuksi tänä vuonna 1,3 prosenttia ja ensi vuonna 1,1 prosenttia. Kasvua hidastaa eniten yksityisen kulutuksen kasvun hidastuminen. Toisaalta vienti kasvaa tänä vuonna hieman ennakoitua nopeammin, neljä prosenttia, ja ensi vuonnakin vielä kaksi prosenttia. Tuotannollisten investointien kasvu jatkuu maltillisena, mutta rakentamisen vähentyminen kääntää yksityiset investoinnit kokonaisuutena pieneen laskuun ensi vuonna. Hallituksen vuoteen 2023 mennessä tavoittelemien 75 prosentin työllisyysasteen ja julkisen talouden tasapainon toteutumista on vaikea arvioida, koska nämä tavoitteet on määritelty rakenteellisina ja niiden eri arviointimenetelmät saattavat tuottaa hyvin erilaisia tuloksia.
Suomen palkkataso oli 2015 ylempää eurooppalaista keskitasoa. Suomen suhteellinen asema ei ole juurikaan muuttunut 2010-luvun alun tilanteesta. Hintatason huomioiminen kuitenkin heikentää asemaamme palkkavertailussa. Palkkaerot meillä olivat vertailumaiden pienimpiä ja pysyivät melko samalla tasolla koko tarkastelujakson 2007–2015 ajan. EU-maissa havaittiin erisuuntaista kehitystä palkkaeroissa. Suurin osa palkkojen kokonaisvaihteluista selittyi taustaryhmien sisäisillä palkkaeroilla.
Suomessa toteutettiin vuonna 2005 laaja eläkeuudistus, jossa vanhuuseläkkeen alaikärajaa laskettiin. Tutkimuksessa havaitaan, että ikärajan lasku aikaisti eläkkeelle jäämistä. Kun alaraja laskettiin 65:stä 63:een, myös yleinen eläköitymisikä laski. Taloudellisten kannustimien muutosten vaikutukset eläköitymiseen jäivät paljon heikommiksi alaikärajan muuttamiseen verrattuna. Eläköitymisikään voidaan siis vaikuttaa tehokkaasti ja vähäisin kustannuksin lakisääteistä eläkeikää muuttamalla.
Talous & Yhteiskunta -lehden numeron 2/2019 artikkelit ja haastattelu kertovat tutkimuksista, joita on tehty Suomen Akatemian strategisen tutkimuksen neuvoston hankkeessa "Osaavat työntekijät - menestyvät työmarkkinat". Keskeinen kysymys on, miten sopeudutaan teknologisen kehityksen mukanaan tuomaan työn murrokseen.
Tutkimuksessa tarkastellaan ammattirakenteiden polarisaatiota sekä sitä, että mihin supistuvissa ja rutiininomaisissa ammateissa olevat työntekijät päätyvät hyödyntämällä kokonaisaineistoa vuosille 1970-2014. Ammattirakenteiden polarisaatio on jatkunut Suomessa jo vuosikymmeniä. Ammattirakennemuutoksen kehityskulku on pääosin tapahtunut siten, että keskitason tuotanto- ja toimistotyöntekijät ovat nousseet urapolkuja pitkin asiantuntijatöihin. Viimeaikaista palveluammattien osuutta on puolestaan kasvattanut se, että nuoret siirtyvät työmarkkinoille palvelutöihin. Rutiininomaisia ja kognitiivisia taitoja vaativien ammattien työntekijöillä on kuitenkin suurempi todennäköisyys nousta korkeammille palkkaluokille rutiininomaista ja fyysistä työtä tekeviin työntekijöihin verrattuna. Rutiininomaista ja fyysistä työtä tekevät tippuvat puolestaan suuremmalla todennäköisyydellä matalapalkka-aloille, ja heidän ansiotason kehitys on myös heikompaa.
Palkansaajien tutkimuslaitos on alentanut Suomen talouskasvun ennustettaan kuluvalle vuodelle viimesyksyisestä 2,3 prosentista 1,4 prosenttiin. Kansainvälisen talouden näkymien epävarmuus hidastaa Suomen talouskasvua etenkin kuluvana vuonna. Jos pahimmat uhkakuvat jäävät toteutumatta, kasvu piristyy ensi vuonna hivenen 1,5 prosenttiin. Viime vuonna pysähtynyt viennin kasvu elpyy, ja myös yksityisen kulutuksen kasvu tukee talouskasvua. Suomi on sopeutunut ammattirakenteiden murrokseen yleisesti ottaen hyvin, mutta etenkin perusasteen koulutuksen varassa olevien varttuneiden työntekijöiden työllistämiseen voi olla vaikea löytää työkaluja.
The Labour Institute for Economic Research has lowered its forecast of Finland’s economic growth for the current year from last autumn’s 2.4 per cent to 1.4 per cent. Uncertainty in the international economic outlook will slow Finland’s economic growth, particularly this year. If the worst threats do not materialise, growth will pick up slightly next year to 1.5 per cent. Export growth, which came to a halt last year, will recover and growth in private consumption growth will also provide support to economic growth. In general, Finland has adjusted well to occupational restructuring, but it may be difficult to find means to employ older workers who only have basic education.
Palkansaajien tutkimuslaitos on alentanut Suomen talouskasvun ennustettaan kuluvalle vuodelle vii-mesyksyisestä 2,3 prosentista 1,4 prosenttiin. Kansainvälisen talouden näkymien epävarmuus hidastaa Suomen talouskasvua etenkin kuluvana vuonna. Jos pahimmat uhkakuvat jäävät toteutumatta, kasvu piristyy ensi vuonna hivenen 1,5 prosenttiin. Viime vuonna pysähtynyt viennin kasvu elpyy, ja myös yksityisen kulutuksen kasvu tukee talouskasvua. Suomi on sopeutunut ammattirakenteiden murrokseen yleisesti ottaen hyvin, mutta etenkin perusasteen koulutuksen varassa olevien varttuneiden työntekijöiden työllistämiseen voi olla vaikea löytää työkaluja.
Tämä PT Policy Brief tuo esiin havaintoja Suomen tuloerojen kehityksestä 1990-luvun puolivälin jälkeen. Tällä ajanjaksolla tuloerot ovat kasvaneet. Aluksi kasvu oli hyvin nopeaa, kunnes kehitys tasaantui finanssikriisin myötä. Tämä näkyy tarkasteltaessa kehitystä viiden vuoden ajalta lasketuissa keskituloissa. Taloudessa on tuloliikkuvuutta, ts. tulot vaihtelevat vuodesta toiseen. Havaitsemme, että liikkuvuus tuloportaikossa on vähentynyt. Samalla kun tuloerot ovat kääntyneet kasvuun, on tuloverotuksen progressiivisuus alentunut. Valtion tuloveron alennusten ohella tähän on erityisesti tulojakauman huipulla vaikuttanut pääomatulojen voimakas kasvu.
Julkisen budjetin sopeuttamistoimia toteutetaan usein etuuksien indeksileikkauksina tai tuloverojen korotuksina. Näillä toimenpiteillä on tulonjako- ja työllisyysvaikutuksia. Tämä PT Policy Brief esittää SISU-mallilla lasketut vaikutukset käytettävissä oleviin tuloihin tuloluokittain, jos valtion tuloveroasteikkoa korotettaisiin 0,4 prosenttiyksiköllä tai jos kansaneläkeindeksiä leikattaisiin. Molemmissa toimenpiteissä budjetti vahvistuisi 180 miljoonalla eurolla mutta tulonjakovaikutukset ovat huomattavan erilaiset. Oheisen kuvion mukaisesti indeksileikkaukset kohdistuvat voimakkaasti alempiin tulonsaajakymmenyksiin, kun taas tuloveron korotukset kohdistuvat ylempiin kymmenyksiin. Kun huomioidaan muutosten aiheuttamat työllisyysvaikutukset, kokonaiskuva muuttuu vain hieman.
Makeisvero otettiin käyttöön makeisille ja jäätelölle vuoden 2011 alusta. Virallinen perustelu oli kerätä verotuloja, mutta poliittisessa keskustelussa selvä tavoite oli ohjata kulutusta terveellisempään suuntaan. Makeisvero nosti selvästi makeisten kuluttajahintoja, mutta se ei vaikuttanut makeisten kysyntään. Toisaalta vuonna 2014 virvoitusjuomavero nousi sokerillisille juomille, mutta sokerittomat juomat jäivät alemmalle verotasolle. Tämä muutos alensi sokerillisten juomien kulutusta ja ohjasi kulutusta sokerittomiin juomiin. Onnistunut terveellisiin tuotteisiin ohjailu näyttääkin vaativan riittävän läheisen terveellisempien tuotteiden ryhmän olemassaolon.
Talous & Yhteiskunta-lehden "Suuren vaalinumeron" 1/2019 jutut käsittelevät aiheita, jotka voivat nousta esille kevään vaalikeskusteluissa. Pääpaino on ilmastonmuutoksessa: haastateltavana on Maailman ilmatieteen järjestön pääsihteeri Petteri Taalas, ja kahdessa eri artikkelissa pohditaan metsien hiilinielujen ja yhdyskuntarakenteen merkitystä pyrittäessä hillitsemään ilmaston lämpenemistä. Muut artikkelit käsittelevät tuloerojen kasvua, sotea, eläkkeiden riittävyyttä, maahanmuuttajien työllistymistä, EMUn uudistamista, eurooppalaista palkkavertailua ja kestävyysvajeen sopimattomuutta talouspolitiikan suunnitteluun.
Raportissa tehdään laskelmia korkeakouluopiskelijoille suunnatun opintotuen tulorajojen muutosten vaikutuksista. Opintotuen tulorajojen tavoite on, että suurituloisille opiskelijoille ei makseta opintotukea. Samalla nykyiset tulorajat kuitenkin estävät opiskelijoita tienaamasta niin paljon kuin he haluaisivat. Laskelmissa hyödynnetään simulaatiomallia, jonka avulla voidaan arvioida miten opiskelijoiden tulojakauma muuttuisi eri vaihtoehtoisissa opintotuen tulorajojen muutoksissa. Tulosten mukaan nykyisiä tulorajaoja voisi nostaa esimerkiksi 50 prosentilla, jolloin yhdeksän kuukauden ajan opintotukea nostavan opiskelijan vuosituloraja olisi 18 000 euroa nykyisen noin 12 000 euron sijaan. Laskelmien mukaan tällöin päästäisiin opintotuen nykyisten tulorajojen haitallisista tulovaikutuksista laajasti ottaen eroon, koska vain harva opiskelija tienaisi tätä tulorajaa enempää. Ottaen huomioon verotulot ja tulonsiirrot tämä vaihtoehto lisäisi julkisyhteisöjen nettotuloja arviolta 5,9 miljoonaa euroa vuodessa.
Tässä tutkimuksessa tutkitaan diskreettien valintajoukkojen vaikutusta palkansaajien työn tarjonnan reagoimiseen tuloveroihin. Artikkelin empiirisessä osiossa hyödynnetään opintotuen tulorajojen aiheuttamaa tuloveroissa tapahtuvaa äkillistä nousua, ja reformia, jossa tulorajoja nostettiin. Tulosten mukaan vuoden 2008 reformi, jossa tulorajaa nostettiin 9 opintotukikuukautta nostaneille 9000 eurosta 12000 euroon, aiheutti merkittäviä muutoksia opiskelijoiden tulojakaumassa. Tulojakauma siirtyi korkeammalle tasolle lähtien noin 2000 euron tuloista. Koska opiskelijoiden verojärjestelmässä ei tapahtunut muutoksia näin alhaisella tasolla vuoden 2008 reformissa, eivät työn taloustieteen normaalit mallit pysty selittämään tätä siirtymää. Artikkelissa esitetään empiirisiä lisätuloksia, teoreettisia argumentteja ja simulaatiomalli, jotka kaikki viittaavat siihen, että tuloksen pystyy selittämään diskreettien valintajoukkojen mallilla. Lisäksi artikkelissa esitetään, että verotuksen hyvinvointitappiot voivat olla suuremmat kuin empiirisesti estimoidut, jos valintajoukot ovat diskreettejä, mutta niiden ajatellaan olevan jatkuvia.
Talous & Yhteiskunta -lehden uuteen numeroon sisältyy artikkeleita veropohjasta ja -vajeesta, liikenteen veroista, naisista tulojakauman huipulla, työllisyyden kasvusta, mikrosimulaatiomalleista ja digitalisaatiosta. Lehdessä on myös Helsingin yliopiston professori Uskali Mäen haastattelu, jossa käsitellään tieteenfilosofista näkökulmaa taloustieteeseen.
Tutkimuksessa rakennettiin uusia makrotaloudellisia malleja PT:n ennustetyötä varten. Malleilla tehtiin ennusteita vuosille 2017 ja 2018. Mallien BKT-ennuste vuodelle 2017 on 3,1 prosenttia (vrt. toteutunut 2,8 prosenttia) ja vuodelle 2018 1,8 prosenttia (vrt. PT:n 11.9 ennuste 2,7 prosenttia).
UN WOD 2024 will take us on a journey of discovery through the ocean's vastness, tapping into the wisdom and expertise of global policy-makers, scientists, managers, thought leaders, and artists to awaken new depths of understanding, compassion, collaboration and commitment for the ocean and all it sustains. The program will expand our perspectives and appreciation for our blue planet, build new foundations for our relationship to the ocean, and ignite a wave of action toward necessary change.
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Property appraisals completed in May for downtown Reno’s Community Assistance and Triage Centers (CAC) reveal that repairing the buildings to bring them back into service would cost an estimated $10.1 million—nearly four times the amount previously reported by city staff.
Combined Illegal, Unregulated and Unreported (IUU) Vessel List.Christina Parmionova
The best available, up-to-date information on all fishing and related vessels that appear on the illegal, unregulated, and unreported (IUU) fishing vessel lists published by Regional Fisheries Management Organisations (RFMOs) and related organisations. The aim of the site is to improve the effectiveness of the original IUU lists as a tool for a wide variety of stakeholders to better understand and combat illegal fishing and broader fisheries crime.
To date, the following regional organisations maintain or share lists of vessels that have been found to carry out or support IUU fishing within their own or adjacent convention areas and/or species of competence:
Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR)
Commission for the Conservation of Southern Bluefin Tuna (CCSBT)
General Fisheries Commission for the Mediterranean (GFCM)
Inter-American Tropical Tuna Commission (IATTC)
International Commission for the Conservation of Atlantic Tunas (ICCAT)
Indian Ocean Tuna Commission (IOTC)
Northwest Atlantic Fisheries Organisation (NAFO)
North East Atlantic Fisheries Commission (NEAFC)
North Pacific Fisheries Commission (NPFC)
South East Atlantic Fisheries Organisation (SEAFO)
South Pacific Regional Fisheries Management Organisation (SPRFMO)
Southern Indian Ocean Fisheries Agreement (SIOFA)
Western and Central Pacific Fisheries Commission (WCPFC)
The Combined IUU Fishing Vessel List merges all these sources into one list that provides a single reference point to identify whether a vessel is currently IUU listed. Vessels that have been IUU listed in the past and subsequently delisted (for example because of a change in ownership, or because the vessel is no longer in service) are also retained on the site, so that the site contains a full historic record of IUU listed fishing vessels.
Unlike the IUU lists published on individual RFMO websites, which may update vessel details infrequently or not at all, the Combined IUU Fishing Vessel List is kept up to date with the best available information regarding changes to vessel identity, flag state, ownership, location, and operations.
AHMR is an interdisciplinary peer-reviewed online journal created to encourage and facilitate the study of all aspects (socio-economic, political, legislative and developmental) of Human Mobility in Africa. Through the publication of original research, policy discussions and evidence research papers AHMR provides a comprehensive forum devoted exclusively to the analysis of contemporaneous trends, migration patterns and some of the most important migration-related issues.
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This report explores the significance of border towns and spaces for strengthening responses to young people on the move. In particular it explores the linkages of young people to local service centres with the aim of further developing service, protection, and support strategies for migrant children in border areas across the region. The report is based on a small-scale fieldwork study in the border towns of Chipata and Katete in Zambia conducted in July 2023. Border towns and spaces provide a rich source of information about issues related to the informal or irregular movement of young people across borders, including smuggling and trafficking. They can help build a picture of the nature and scope of the type of movement young migrants undertake and also the forms of protection available to them. Border towns and spaces also provide a lens through which we can better understand the vulnerabilities of young people on the move and, critically, the strategies they use to navigate challenges and access support.
The findings in this report highlight some of the key factors shaping the experiences and vulnerabilities of young people on the move – particularly their proximity to border spaces and how this affects the risks that they face. The report describes strategies that young people on the move employ to remain below the radar of visibility to state and non-state actors due to fear of arrest, detention, and deportation while also trying to keep themselves safe and access support in border towns. These strategies of (in)visibility provide a way to protect themselves yet at the same time also heighten some of the risks young people face as their vulnerabilities are not always recognised by those who could offer support.
In this report we show that the realities and challenges of life and migration in this region and in Zambia need to be better understood for support to be strengthened and tuned to meet the specific needs of young people on the move. This includes understanding the role of state and non-state stakeholders, the impact of laws and policies and, critically, the experiences of the young people themselves. We provide recommendations for immediate action, recommendations for programming to support young people on the move in the two towns that would reduce risk for young people in this area, and recommendations for longer term policy advocacy.
Jennifer Schaus and Associates hosts a complimentary webinar series on The FAR in 2024. Join the webinars on Wednesdays and Fridays at noon, eastern.
Recordings are on YouTube and the company website.
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2. PALKANSAAJIEN TUTKIMUSLAITOS •TYÖPAPEREITA
LABOUR INSTITUTE FOR ECONOMIC RESEARCH • DISCUSSION PAPERS
* This study is a part of the project financed by the TEKES (National Technology Agency of
Finland). I am grateful to Eija Ahola from TEKES for comments and to Satu Nurmi who has
prepared the linked data for my use. The usual disclaimer applies.
**Labour Institute for Economic Research, Pitkänsillanranta 3A, 00530 Helsinki.
E-mail: eero.lehto@labour.fi
Helsinki 2004
197
ON THE
MOTIVES AND
GEOGRAPHICAL
STRUCTURE
OF FINNISH
MERGERS AND
ACQUISITIONS*
Eero Lehto**
4. 3
ABSTRACT
We have estimated a multilogit model for the probabilities that a firm will acquire or
become a target in different M&A categories, which are defined according to the distance
between an acquiring firm and a target. We discovered that such characteristics of a firm
that can be regarded as an indication of a good monitoring capacity or ability to internalise
the potential synergies of M&As increase the probability that the firm acquires a distant
firm. Respectively, such factors that ease the monitoring of a firm’s quality increase the
probability that the firm becomes a target in a distant M&A.
Key words: Mergers and acquisitions, home bias, monitoring
JEL codes: D8, G34, R30
TIIVISTELMÄ
Tämä tutkimus on jatkoa edelliselle työpaperille (No 195), joka vertasi eri yrityskauppa-
tyyppejä toisiinsa. Nyt estimoidaan todennäköisyyksiä sille, että yritys tulee olemaan osalli-
sena – joko ostajana tai kohteena – tietyn tyyppisessä yrityskaupassa sen sijaan, että yritys
ei tarkasteluvuonna tule olemaan osallisena missään yrityskaupassa. Tarkastelun laajenta-
minen koskemaan myös yrityskauppojen ulkopuolelle jääneitä yrityksiä kasvatti havainto-
jen lukumäärää huomattavasti. Vaikka aineisto rajattiin koskemaan vain yrityksiä, jotka
sisältyvät Tilastokeskuksen tilinpäätösaineistoon, havaintojen lukumäärän nousi jopa yli
200 000:teen vuosina 1989–2000.
Tässä tutkimuksessa arvioidaan, miten yritysten ominaisuudet vaikuttavat todennäköisyy-
teen, että yritys tulee olemaan osallisena tietyntyyppisessä yrityskaupassa. Tutkimus tuo si-
ten esiin tekijöitä, jotka vaikuttavat ensinnäkin siihen, että yrityskauppa ylipäätänsä syntyy.
Toiseksi tutkimus tuo esiin tekijöitä, jotka vaikuttavat siihen, että yrityskauppa toteutuu
tietyntyyppisenä. Koska yrityskaupat ryhmitellään seutukuntien sisäisiin, seutukuntien väli-
siin ja kansainvälisiin, on yrityskauppojen alueulottuvaisuus edelleen huomion kohteena.
Analysoitaessa todennäköisyyttä, että yritys tulee yrityskaupan kohteeksi on yhtenä yritys-
kaupparyhmänä lisäksi lähinnä yrityksen sisäisiksi luonnehdittavat omistusjärjestelyt.
5. 4
Tämän tutkimuksen tulokset osoittavat, että ostavan yrityksen korkeasti koulutetun henkilö-
kunnan osuuden nousu lisää todennäköisyyttä, että yritys ostaa toisen yrityksen. Eniten os-
tavan yrityksen henkilökunnan koulutustason nousu lisää kuitenkin halukkuutta ostaa yritys
ulkomailta. Tutkimustulokset viittaavat myös siihen suuntaan, että ostavan yrityksen kor-
keasti koulutetun (muu kuin tekninen koulutus) henkilökunnan osuuden kasvu lisäisi enem-
män seutukuntien välisten kuin sisäisten kauppojen todennäköisyyttä. Näiden tulosten voi-
daan tulkita kuvastavan sitä, että koulutustason nousu lisää ostavan yrityksen kykyä tehdä
havaintoja kaukanakin sijaitsevan kohteen todellisesta arvosta. Toiseksi tulos osoittanee, et-
tä korkeasti koulutettu työvoima tekee mahdolliseksi madaltaa niitä yrityskulttuurista ja
paikallisuudesta määräytyviä esteitä sisäistää sellaisen yrityskaupan synergiaetuja, joissa
kohde sijaitsee erimerkiksi ulkomailla.
Ostajayrityksen T&K-investoinneista kertyvä T&K-pääoma lisää vain kansainvälisten yri-
tyskauppojen todennäköisyyttä. Tämä tulos kuvannee sitä, että T&K:lla karttuva tietopää-
oma lisää ostajayrityksen kykyä ottaa vastaan uutta tietoa ja arvioida kohdeyritystä, vaikka
kohde sijaitsisi kaukanakin.
Analyysi yrityskaupan kohteeksi joutumisesta osoitti, että T&K:lla kartutetun tietopääoman
hallussapito lisää kohteeksi joutumista kaikissa yrityskaupparyhmissä. T&K vaikuttaa kui-
tenkin eniten todennäköisyyteen tulla ulkomaisen yrityksen ostamaksi. Myös seutukuntien
välistenkin kauppojen todennäköisyyttä tämä muuttuja lisää enemmän kuin seutukunnan si-
säisten kauppojen todennäköisyyttä. Tämä tuloksen voidaan ajatella kuvastavan sitä, että
tietopääomaa voidaan arvioida myös kaukaa ja että sen yhteinen hyväksikäyttö uudessa ja
laajemmassa omistuksessa ei kohtaa helposti aluerajoja.
Tämä tutkimus myös paljasti, että jos yrityksen henkilökunta on muuten kuin teknisesti kor-
keasti koulutettua, se joutuu pikemminkin paikallisen yrityksen kuin seutukunnan ulkopuo-
lella tai ulkomailla sijaitsevan yrityksen ostamaksi. Tämän tulos kuvannee sitä, että kauka-
na sijaitsevan kohteen arvioiminen vaikeutuu, kun inhimillisen pääoman merkitys korostuu.
6. 5
1. INTRODUCTION
In this empirical study we focus on the reasons of mergers and acquisitions (M&As) and, on
the other hand, on the differences between various types of M&As which are classified
according to the location of an acquirer with respect to a target. The M&A categories
considered are intra-regional, inter-regional, cross-border and (internal) rearrangements (for
targets only). We estimate the probability that a certain type of M&A occurs both from the
acquirer’s and from the target’s point of view. As noticed by Böckerman and Lehto (2003),
the home bias – which says that acquiring firms tend to purchase targets which are located
nearby – is also typical of Finnish M&As under consideration. We then address the question
as to whether such factors exist that alleviate the influence of home bias.
General reasons behind M&As
Let us first consider the general reasons behind M&As. The empirical findings of, for
example, Hall (1990) and Lehto and Lehtoranta (2003) state that by means of M&As firms
tend to internalise the potential synergies by transferring knowledge or tend to increase
market power, as shown by Gugler et al. (2003). M&As, as an integral part of corporate
control strategy, are also used as a means to affect manager-shareholder conflict and
discipline managers (see, for example, Schleifer and Vishny, 1988).
In this empirical study we stress the transfer of technology as a motive of M&As. We think
that M&A can be a practical means to transfer knowledge when contractual schemes such
as licensing are ruled out, owing to imperfections in information and consequent non-
contractibility (see Agion and Tirole, 1994). Trading with knowledge assets is also often
impossible, because it can be human-embodied and tacit by nature as is emphasized by
Kogut and Zander (1992) and Spender (1996).1
Firms also lean on M&As because it is
possible that in the contractual arrangement and in the more informal relationship, in which
the transfer mechanism of knowledge spillovers is often based on trust and reciprocity (see,
Nonaka and Takeuchi, 1995), the receiver of the knowledge cannot be safeguarded against
appropriation uncertainties and opportunism (see Pisano (1990) and DeBresson and
Amesse, 1991).
The empirical evidence also supports the idea of the central role of technology transfers in
M&As. Earlier research has shown that M&A activity is highest in the industries in which
1
See also the discussion in Hämäläinen and Schienstock (2001).
7. 6
the R&D intensity is highest (see Lemelin, 1982; MacDonald, 1985 and Hall, 1990). It also
looks, at least in the Finnish data, as if both parties of an M&A are inclined to invest in
R&D (see Lehto and Lehtoranta, 2003).2
The fact that the acquirer also invests in R&D is
interpreted as describing the situation in which a firm’s own R&D strengthens the firm’s
‘absorptive capacity’ to utilise the delivered knowledge delivered, as well as to take
advantage of that knowledge which spills over, as suggested by Cohen and Levinthal (1990)
(see also and Kim and Dahlman, 1992).
We also consider whether some other motives exist behind M&As. It has been argued that
leveraged acquisitions put pressure on the firm to use its cash flow to serve the long-term
debt at the expense of investments (see Hall, 1990). The empirical findings, however, tell us
that indebtedness decreases a firms probability to acquire (see Jensen, 1998; Tremblay and
Tremblay, 1998; Blonigen and Taylor, 2000 and Lehto and Lehtoranta, 2003). This finding
may rather reflect the imperfections of the market in financing risky M&As. An M&A can
also be used to discipline the loss-making managers into improving a firm’s profitability
(see Palepu, 1986). This would suggest that unprofitable firms are more easily acquired than
other firms. There are good grounds for assuming that a firm’s size also positively
contributes to the probability that a firm acquires or is acquired. The empirical findings also
support this assumption (see Blonigen and Taylor, 2000 and Lehto and Lehtoranta, 2003).
Geographical structure of M&As
We also analyse in this study why a firm falls into some of the defined M&A categories.
Earlier literature on the geography of M&As has discovered that the short distance is an
important factor which promotes takeover activities. This is shown by Green and Gromley
(1984), Green (1987) and Green (1990), who consider the U.S. pattern and by Green and
McNaughton (1989), and Aliberti and Green (1999), who investigate the Canadian pattern
in takeovers across regions. The studies which also consider the regional aspect of M&As
mainly focus on aggregate variables. Then the geographical distance is explained by the
characteristics of the locations of the firms involved in M&As. Considering the background
characteristics of the German regions, Rodriguez-Pose and Zademach (2003), for example,
found that the distance between an acquiring firm and its target plays an important role in
the dynamics of M&A activity. Using gravity approach, Ashcroft et al. (1994) discovered
2
Investigating U.S. electronic and electrical equipment firms, Blonigen and Taylor (2000) obtained a
result, according to which firms tend to choose either “make” or “buy” strategies in R&D.
8. 7
that the M&A flows between the regions were found as being positively related to their size
and negatively related to the distance.
Rather few studies have considered the factors which have an effect on the importance of
the distance between a target firm and an acquirer. Di Giovanni (2003) estimated a gravity
model in which cross-border merger flows are also explained by the bilateral distance and
costs to transmit information (proxied by telephone traffic). Portes and Rey (1999)
explained cross-border equity flows by telephone traffic in a similar setting.
Before going into the empirical framework in which the spatial aspect of M&As is
examined, we should be able to give an answer to the question about the forces which have
an impact on the distance between an acquirer and a target firm. Theory does not provide
many explanations about the relevance of the home bias in M&As, according to which
firms which are located close to each other tend to merge. One motivation for the short
distance between an acquirer and an acquired firm is based on competition implications.
Levy and Reitzes (1992) show that when product differentiation depends on the distance
between a customer and a firm, the merger of nearby firms eases competition more than the
merger of distant firms, as a consequence of which near by firms tend to merge. Another
explanation addresses the possibilities to internalise synergy gains of M&As through the
utilization of common assets. The common use of an asset possessed by an acquirer or a
target may, however, have geographical limits. One can imagine that this concerns human
capital and many kinds of tangible assets in network industries and various service industries.
This topic is explored more closely by Böckerman and Lehto (2003).
We also think that asymmetric information may be the most important reason for the
phenomenon, according to which the parties of M&A tend to be located close to each other.
The literature on knowledge spillovers stresses that the tacit and human-embodied nature of
knowledge has a central role in knowledge transfers (see, for example, Nonaka and
Takeuchi, 1995 and Morgan, 2004). The transmission of tacit knowledge, however,
presumes face-to-face contact or other mechanisms that require spatial proximity (von
Hippel, 1994 and Morgan, 2004). It is then logical to assume that the geographical
restrictions which govern the transmission of knowledge also reflect the conditions under
which a potential acquirer assesses the value of a target. This says that an increase in the
distance between a target and an acquirer impairs the quality of the monitor which concerns
the value of the target.
9. 8
According to recent empirical findings (see Jaffe et al., 1993; Grünfeld, 2002; Keller, 2002;
Maurseth and Verspagen, 2002 and Greuntz 2003), geographical proximity increases the
positive impact of external knowledge on the firm’s outcome. According to this, a firm’s
ability to absorb the knowledge, which is located far away, is difficult. As concerns M&As,
the findings above hint that it really becomes more difficult to evaluate the value of a target
when it is located far from an acquirer.
Theory, on the other hand, suggests that if the assessment of the expected value of the target
is unbiased and the firms are risk-neutral, imprecise information will not generate a home-
bias. Gehrig (1993) considers a situation in which domestic risk-averse investors observe
the payoffs of domestic firms with higher precision than risk-averse foreign investors. The
foreigner’s estimate of the expected return is unbiased but the large variance around the
mean makes a foreign target risky. This model leads to home bias, according to which the
investments abroad are, in an equilibrium, much less than what the optimal diversification
of an investment portfolio would suggest. But this result requires investors to be risk-averse.
As concerns acquisitions, the decision-makers are the firms and not the single investors, and
so the assumption of the actor’s risk-averseness is no longer well founded. Gordon and
Bovenberg (1996) explain the home bias puzzle in the setting in which risk-neutral foreign
investors buy shares from risk-neutral domestic owners. They rely on the assumption,
according to which such a firm specific output shock arises which only the domestic owners
learn about afterwards. Due to this asymmetry, only the targets that yield the lowest returns
are offered to foreigners who, being aware of this, however, may find it profitable to buy
foreign firms, if the foreign discount rate is below the domestic rate. Lehto (2004) considers
a situation in which a target firm is sold to several potential acquirers. One of the potential
acquirers is assumed to be uninformed. The lack of information is assumed to appear as a
bias between the actual value and expected value. It is shown that in this setting the
informational asymmetry leads to a situation in which the better informed acquirers tend to
buy a target.
On hypotheses and empirical testing
Hypothesising the M&A behaviour, we consider that a potential acquirer which is located
far from a target is not so well informed about a target firm’s value as an acquirer which is
located close to a target firm. This creates the home bias. But there exist, however, such
firm-specific factors that have an impact on the relevance of the distance between an
acquirer and a target firm. We think that the distance does not matter so much if an
10. 9
acquirer’s capacity to accurately evaluate the value of a target firm even from afar is
strengthened. Respectively, the factors which make a target transparent so that its value is
easily assessed, are supposed to increase the probability of M&As in which the distance
between a target and an acquirer is long. To investigate the validity of the above hypothesis
related to the accuracy of monitoring, it is highly important in the empirical analysis to
specify the variables that describe the monitoring capacity of an acquirer and ease in
monitoring a target. We use the educational level of an acquirer’s staff or the R&D
compiled in an acquiring firm as a proxy of monitoring capacity. Considering the ease in
monitoring a target, we think that it is more difficult to monitor human capital (proxied by
the educational level) than, for example, such knowledge assets as patents.
There are also some other reasons for which the parties of M&As tend to be located close to
each other. We think that potential synergies are not necessarily internalised in an efficient
way if the “language” of an acquiring firm and the target firm is incompatible. As Breschi
and Lissoni (2001) have suggested there exist “epistemic” communities whose
communication in the exchange of technical and scientific messages is tacit and which
therefore act as exclusionary devices. The geographical frontiers of these communities (or
knowledge networks) set regional limits to the transmission of knowledge and to the
internalisation of synergies. It is possible that the increase in education also helps to relieve
geographical restrictions, in this respect, too.
In M&As firms may also internalise synergy gains through a common use of assets
possessed either by an acquiring company or by a target company. But the geographical
restrictions associated with common use may then favour the M&As of closely located
firms. So, we also examine whether the possession of such assets whose common use may
increase profits and whose utilisation may have geographical limits, plays any role in
M&As. We also think that distant M&As are more risky because they are based, as a rule,
on more imprecise information than close M&As. From this and from the imperfections of
the financing market it follows that indebted acquirers tend to buy closely located targets.
As far as the patents possessed either by an acquirer or by a target are concerned, we state
that the possession of patents hardly sets any geographical barriers to M&As, because their
value can be evaluated from far away, too. But owing to the ease with which to license
patents and trade in them, patents can hardly motivate firms toward M&As. We, however,
empirically test to see whether patents have any impact on M&As that have occurred.
11. 10
Our study contributes to the previous empirical literature in several respects. The main
contribution of this study is related to the analysis which concerns the geographical
structure of M&As. We estimate a multilogit model in which the likelihood of M&As in
different categories is explained. We discovered that a rise in the staff’s educational level
tends to increase the probability of M&As. This impact is largest in the probability of cross-
border M&As, and in the case of highly educated staff with technical qualifications, this
result concerns only cross-border M&As. The increase in R&D-intensity also seems to
increase only the probability of cross-border M&As. The results obtained are interpreted as
describing the fact that education and the learning related to R&D-activity increase a firms’
ability to assess distant targets and to internalise the potential synergies of distant M&As.
Considering the characteristics of targets, we found that R&D intensity only increases the
probability of cross-border M&As. This may indicate that the firms whose R&D-intensity is
high possess knowledge capital whose common utilisation does not reach geographical
limits. A rise in the staff’s educational level, on the other hand, tends to increase only the
probability of close M&As. We interpret this result as stemming from the difficulty to
evaluate the value of the distant target when human capital has great significance.
2. DATA
The data set on mergers and acquisitions is gathered from the Talouselämä magazine. The
magazine contains all mergers and acquisitions in which the majority share of a Finnish
firm is acquired or in which a Finnish firm acquires a majority share of another firm. All
M&As in which the turnover of both parties exceeds 0.5 million euros are included. The
data set also includes transactions in which only one section of a target firm is bought. The
M&A data set of this study covers the period from 1989 to 2000.
To analyse the likelihood for different types of M&As we form an outcome variable which
classifies each firm in the data as belonging only to one M&A category; the categories are
intra-regional, inter-regional, cross-border, not involved in M&A and rearrangement (only
for target firms). The data includes only such acquirers that are old firms. The classification
is hierarchical in the sense that the outcome is always cross-border when an acquirer or
target has been a part of a cross-border M&A. An outcome is inter-regional when a firm has
been involved in an inter-regional M&A and not in a cross-border M&A. An outcome is
intra-regional when a firm, in addition to being an intra-regional M&A, has not been a part
of an inter-regional or a cross-border M&A. In order to be classified as a rearrangement, a
12. 11
target cannot have been a part of any other type of an M&A. Because we also consider non-
M&A firms, it has been necessary to give each firm a unique status. We also think that the
firm-specific requirements of being part of an M&A become stricter when the distance
between an acquiring firm and a target firm lengthens.
In the fourth category for the targets, called rearrangements belong those ownership
arrangements as a consequence of which a new firm is created and in which an old business
ID changes into a new ID. Management buy-outs and such divestitures in which the
ownership changes and a new firm is created typically belong to this group. In most
rearrangements another firm does not necessarily obtain the target firm. Also in a few
combination mergers in which a new firm is founded (being an acquirer) and in which the
location of a target with respect to an acquirer is unclear, the old firms are classified as
rearranged targets. In internal rearrangements the distance between a target and a purchaser
is non-existent, and in the rest of these cases the distance is unclear.
By intra-regional is meant a domestic M&A in which both an acquirer and an acquired firm
are located in the same NUTS4 region. The so-called NUTS4 regions consist of commuting
areas and the number of these regions in Finland is 85. In the inter-regional M&As an
acquiring firm and a target firm are then located in different NUTS4 regions. In the cross-
border M&As a Finnish firm is bought by a foreign firm. Because we have firm specific
information only about domestic firms, we take into account only the domestic firms that
are purchased by foreign firms. Such incidences in which a firm has purchased several
targets within a year are classified as being one outcome. The same concerns the incidences
in which a target company or its share has also been bought more often than once during a
year.
The distribution of M&A incidences is reported in Table 1. In the data set which is not
restricted by the R&D survey (owing to the inclusion of the R&D variable), the number of
firms which are not involved in any M&A in the year concerned total about 233 000 in the
years 1989–2000. The inclusion of the R&D variable lowers the respective number of all
observations to about 51 000.
13. 12
Table 1. The number of incidences in different M&A-categories.
Intra-
regional
Inter-regional Cross-border Rearrangement Total
Acquirers (data without
R&D variable)
384 626 390 0 1400
Targets (data without
R&D variable)
390 664 237 188 1479
Acquirers (R&D
variable included)
258 522 349 0 1129
Targets (R&D variable
included)
242 454 169 148 1013
Comparing the frequencies of different incidences in Table 1, we can conclude that in
domestic M&As Finnish firms have more often been targets than acquirers, and that in
cross-border M&As the situation is reversed. It seems that the capital net-flow outside
Finland has been partly implemented through M&A activity.
The M&A data obtained is linked to various data sets of Statistics Finland, which also
decreases the number of the observations in which a specified outcome variable is non-zero.
Of the matched data sets the Business Register provides information about the turnover,
industry-levels and other firm characteristics such as the firm’s age. Actually, we specify
the industries to which each firm belongs by using the Finnish (two-digit) TOL2
classification. In our new classification industries are divided into 18 separate groups. The
number of different industry-levels is limited, because of the small number of M&A
incidences in some TOL2 groups. The defined industry codes are used to control the impact
of industry-specific factors.
From the Financial Statements Data we obtained information about the firm’s indebtedness,
gross profit-ratio and the size of the fixed tangible assets. Information about the personnel’s
education is obtained from Employment Statistics, which is also maintained by Statistics
Finland. The patent variables originated from the comprehensive registers of the National
Board of Patents and Registration of Finland and the information about R&D expenditures
that is used to calculate firms’ R&D stock is obtained from the R&D Survey of Statistics
Finland. The data size of linked data is restricted by the Financial Statements Data.
14. 13
3. METHOD
We estimate the multinomial logit model (multilogit) (see Greene, 2000). Consider
outcomes 1,2, …, m which describe the type of M&A. Let m = 3. Let y then be an outcome
variable so that y = 1, 2 or 3 and let X denote explanatory variables. In the multilogit model
we estimate coefficients iβ – which correspond to each category i = 1, 2 and 3 – in the
probabilities
32
1
1
)1(Pr ββ XX
ee
yob
++
==
32
2
1
)2(Pr ββ
β
XX
X
ee
e
yob
++
==
32
3
1
)3(Pr ββ
β
XX
X
ee
e
yob
++
== .
Above, we have set 1β = 0, and so coefficients 2β and 3β measure the change relative to y
= 1 group. This kind of normalization is necessary to remove the indeterminacy in the
model. Group y = 1 is called a comparison group or a base group.
The relative probability of y = 2 is then 2
)1(Pr
)2(Pr βX
e
yob
yob
=
=
=
.
Interpreting the results one must then take into consideration which group is chosen as a
base group. In the case considered, for example, coefficient vector 2β tells of the impact of
X on the probability that y = 2 occurs instead of y = 1. In all regressions of this study, “no
M&A” -outcome is considered as the comparison group.
Because the same firm can fall into several M&A categories in several periods, the data set
analysed includes observations which are not independent. We therefore adjusted the
standard errors using the Huber and White robust estimator of variance.
15. 14
4. THE SELECTION OF VARIABLES AND TESTABLE
HYPOTHESES
We then explore more closely the hypotheses which are to be tested with the explanatory
variables of Table 2. The firm’s size, proxied by the TURNOVER variable, is expected to
increase the likelihood that a firm acquires. The larger resources to buy and, presumably,
the greater number of opportunities to find appropriate targets have an effect in this
direction. Because, in our data, a target can also mean an independent entity of a larger
firm, the scale variable is also assumed to have a positive effect on the probability that a
firm becomes a target in M&A. In addition, the larger the firm is, the more expertise it has
to make accurate monitors about the target firm, and for this reason, we assume that
TURNOVER increases, in particular, the likelihood of cross-border acquisitions.
Every domestic firm is assigned to one region. The actual geographical operating space in
domestic regions enlarges with the number of establishments (MULTI). By shortening the
distance and improving the ability to monitor the domestic target and, on the other hand,
having a positive effect on the ease in monitoring a target, MULTI is expected to increase
domestic and, in particular, inter-regional M&As concerning both the probability that a firm
acquires and is acquired. The dummy variable EXPORT that describes whether a firm has
exported or not, is a proxy of the firm’s presence in foreign countries, and therefore we
assume that EXPORT increases the likelihood of cross-border M&As for both acquirers and
targets. We also expect that foreign owned firms (FOREIGN) become more easily acquired
by foreign firms, because the targets are then already present in foreign countries.
A firm’s R&D intensity (RDINT) or the staff’s educational level (EDU1 and EDU2), being
proxies of the firm’s capacity to absorb new knowledge, are assumed to increase the
likelihood that a firm acquires. As Lehto and Lehtoranta (2003) have shown, this ability has
a positive influence on M&As, one important motivation of which is to transfer new
knowledge. Because EDU1 and EDU2 also describe a firm’s ability to monitor the target,
these variables are assumed to relieve the home bias in M&As and increase the likelihood
that a domestic firm acquires a foreign firm. Monitoring the target is assumed to become
more difficult when the personnel of the target company consists of highly educated
workers with specific skills, and so we expect that the M&As of such firms are not so
likely to occur or occur only within the same region. It is rather difficult to say whether it is
easy to monitor the value of R&D capital from afar, too, and whether a target’s RDINT
therefore increases the likelihood that a firm is acquired.
16. 15
The communication gap between a target and an acquirer increases in distance and in the
importance of the human-embodied knowledge. We believe that this gap is, however,
narrowed by the educational level of an acquirer’s staff. From this it also follows that EDU1
and EDU2 increase the likelihood that a firm acquires a distant target.
As far as the common utilization of assets is concerned, one may also expect that the
common utilization of R&D capital by either party of an M&A does not reach the
geographical limits so easily as the common utilization of tangible fixed capital (FIXED).
For these reasons RDINT is expected to increase and FIXED to decrease both the
probability that a firm acquires and the probability that a firm is acquired in distant M&A
categories.
Owing to the ease in contracting on patents or trading them, we do not think that the
possession of patents (PATENTS1 ns PATENTS2) motivates a firm to acquire another
firm. The ease in monitoring targets could increase in a target’s age (AGE), and so we
expect that AGE increases the probability that a distant target is acquired.
M&As are more likely within regions that contain a great number of firms (NUMBER).
Therefore we also control the number of firms that are located in the same region.
NUMBER by definition will increase the probability of intra-regional M&As at the expense
of other M&A types.
We also consider the impact of the firm’s profitability (PROFITS) and indebtedness
(DEBT) on M&A activity. Insofar as acquisitions are a mechanism by which a firm’s
manager who fails to maximize its market value is replaced, as Palepu (1986) states,
PROFITS should have a negative impact on the likelihood that a firm is acquired.
Imperfections in the financial markets could explain the influence of PROFIT and DEBT on
the probability that a firm acquires. Because M&As and, in particular, distant M&As are
risky investments, it is evident that this risk raises the price of external finance or restricts
its availability. For these reasons, we expect that the firm which acquires remote domestic
firms or foreign firms should have a strong balance sheet with low indebtedness and good
profitability.
17. 16
Table 2. Description of the variables.
Variables Definition/measurement
AGE The age of a firm is measured in years. The variable is the employment-
weighted average of the ages of the firm’s plants.
MULTI The company consists of several establishments = 1, otherwise = 0.
FOREIGN The majority share is in foreign ownership = 1, otherwise = 0.
EXPORT The firm has exported=1, otherwise = 0.
TURNOVER A log of the turnover of a firm
PROFITS Gross margin divided by the turnover of a firm
DEBT Short- and long-term debts divided by the total assets of a firm
FIXED Fixed tangible assets divided by the total assets of a firm
EDU1 The share of highly educated with technical qualifications of the total number of
employees in a firm
EDU2 The share of highly educated (excluding the number of highly educated with
technical qualifications) of the total number of employees in a firm
RDINT A log of [(R&D stock +1)/turnover].3
R&D stock of a company that is estimated
based on the previous R&D expenditures (see Lehto and Lehtoranta, 2003).
PATENTS1 The number of domestic patents that the firm currently owns
PATENTS2 The number of U.S. registered patents that the firm currently owns
NUMBER A log of the number of firms whose turnover is over 0.5 million euros4
in the
same region
INDUSTRY 18 industry levels
YEARS 12–1
To control the impact of technological and regulatory shocks – which Andrade et al. (2001)
consider a major reason for the occurrence of mergers – we also include 18 “TOL2-based”
industry level dummies in the models under consideration. Owing to the inclusion of these
dummies, the focus is concentrated on the variation within industries. Because the industry
dummies, on the other hand, also remove that kind of inter-industry variation that is
explained by the factors which are important for this study, we decided to report the
estimation results with industry dummies and without them.
3
Transformation R&D stock + 1 is used, because some of the firms have not invested in R&D and the
stock is zero.
4
This restriction is the same restriction as the one used by the Talouselämä magazine in its listings of
mergers.
18. 17
5. RESULTS
We estimate a multilogit model for the firms which have been a part of M&As (as an
acquiring firm or as a target firm) and for other firms which have not been part of M&As.
We first esimate models which include RDINT (Tables 3 and 4). Then we replace RDINT
by patent variables (see Tables A1 ands A2), by which the number of observations
increases, because the R&D survey no longer limits the size of the data. The robustness of
the results is tested by estimating all models with and without industry-level dummies. The
results are reported as marginal effects and the time period is 1989–2000. All models
include unreported year dummies. In all estimations, the firms who have not been a part of
M&As (no M&A group) are the comparison group. The descriptive statistics of the data is
given in the Appendix in Tables A3 and A4. The statistics in the data about targets is not
much different from the data set about acquirers, and so we report only the statistics about
acquirers. Omitting RDINT enlarges the data set with additional observations (firms) that
have, on the average, only one establishment, do not export and are small, indebted, fairly
profitable, young and not foreign owned.
Let us first focus on the results concerning the probability that a firm acquires. The
TURNOVER variable as a proxy of a firm’s size has a positive impact on the probability
that a firm will acquire in all categories as expected (Tables 3 and A1). The impact of
MULTI – as an indicator of the firm’s geographical space – also has a positive impact.
EXPORT increases the probability of cross-border M&As and this also corresponds to
expectations. The negative impact of a firm’s age (AGE) is rather surprising, and not
according to expectations. This result may be an indication of the M&A wave5
that even
occurred in Finland in the late nineties and in 2000 when, in particular, young ICT-service
firms rapidly expanded by purchasing other firms. The negative coefficient of FOREIGN in
Tables 3 and A1 shows that a firm who is owned by foreigners is not independent enough to
make acquisition decisions in a similar fashion as domestically owned firm.
Earlier, Lehto and Lehtoranta (2003) discovered that R&D-capital possessed by a firm
increases the likelihood that a firm acquires another firm. This result seems to be valid only
for cross-border M&As (see Table 3). The hypothesis about the positive impact of
educational requirements (measured by EDU1 and EDU2) on the probability that a firm
acquires also seems to be verified. The impact of EDU1 and EDU2 is strongest on the
5
M&A wave in late 1990s was also experinced in many other countries (see, for example, Evenett, 2003).
19. 18
probability of cross-border M&As in Tables 3 and A1. As we have expected, patent
variables have no positive impact on the acquisition probabilities under consideration.
Table 3. Multinominal logit model for acquirers.
Model 1: Pseudo R2
= 0.2382; Model 2: Pseudo R2
= 0.2566
Number of observations = 50883. Base group is no-M&A.
Intra-regional Inter-regional Cross-border
Model 1 Model 2 Model 1 Model 2 Model 1 Model 2
TURNOVER 0.420**
(6.00)
0.462**
(6.58)
0.597**
(10.04)
0.611**
(10.20)
0.967**
(13.80)
1.010**
(14.48)
NUMBER 0.502**
(9.20)
0.512**
(8.74)
-0.119**
(-2.90)
-0.097**
(-2.17)
0.025
(0.42)
0.082
(1.30)
EDU1 0.291
(0.60)
-0.846
(-1.40)
0.371
(0.72)
-1.241*
(-1.95)
2.267**
(4.36)
0.870
(1.34)
EDU2 0.556
(0.73)
-0.483
(-0.49)
2.073**
(4.07)
1.407**
(2.76)
3.577**
(5.88)
2.308**
(2.73)
RDINT -0.034
(-0.45)
-0.022
(-0.28)
0.069
(1.08)
0.034
(0.49)
0.409**
(5.23)
0.308**
(3.60)
FIXED -0.215
(-0.61)
-0.681*
(-1.81)
-0.495*
(-1.65)
-1.002**
(-3.04)
-2.085**
(-4.09)
-2.366**
(-3.99)
DEBT -1.115**
(-4.88)
-1.035**
(-3.63)
-0.267
(-1.22)
-0.139
(-0.63)
-2.207**
(-5.95)
-2.278**
(-5.92)
PROFITS 0.040
(0.44)
0.042
(0.47)
-0.004*
(-1.74)
-0.003
(-0.96)
-0.007**
(-2.94)
-0.007**
(-2.34)
AGE -0.028**
(-2.21)
-0.020
(-1.44)
-0.038**
(-3.71)
-0.032**
(-3.00)
-0.009
(-0.61)
-0.010
(-0.57)
FOREIGN -0.653**
(-2.53)
-0.482*
(-1.87)
-0.252
(-1.35)
-0.074
(-0.40)
-2.002**
(-5.17)
-1.868**
(-4.94)
MULTI 0.908**
(5.12)
0.834**
(4.61)
1.252**
(8.99)
1.161**
(8.26)
0.529**
(2.76)
0.450**
(2.37)
EXPORT -0.051
(-0.30)
0.233
(1.33)
0.089
(0.70)
0.365**
(2.31)
1.148**
(6.07)
1.269**
(6.04)
INDUSTRY Not
included
Included Not
included
Included Not
included
Included
Notes: z-stat in parentheses. ** (*) indicates that the parameter estimate is statistically significant at the 5
(10) percent significance level.
The results reported in Tables 3 and A1 also tell us that the likelihood that a firm acquires
decreases in the firm’s indebtedness (DEBT) as in Lehto and Lehtoranta (2003). We also
discovered that the fixed capital possessed by an acquiring firm (FIXED) decreases the
probability of cross-border M&As as an indication of some geographical limits in the
common use of fixed capital. A negative impact of PROFITS is against expectations. The
possible explanation for this result is the same as for the negative sign of the AGE variable:
the M&A wave, by which firms have grown at the expense of their short-run profitability.
20. 19
Let us then consider the probability that a firm becomes a target. According to the results
(Tables 4 and A2), a firm’s size (TURNOVER) and the geographical reach (MULTI)
positively contributes to the likelihood under consideration. The positive impact of EXPORT
on remote M&As is also in line with our expectations. That TURNOVER and EXPORT also
have a strong positive impact on the probability of rearrangements may reflect the fact that a
couple of large companies – which have been targets in an arrangement in which a new firm
has been founded – have been classified as rearrangements.
That a firm with high RDINT easily becomes a target in M&As and that this concerns cross-
border M&As in particular also corresponds to expectations. The impact of EDU2 is positive
only in the intra-regional and rearrangements categories which may indicate that monitoring
the value of the target from afar is difficult when the weight of human capital in the value of a
firm is remarkable. Without the RDINT variable the impact of EDU1 becomes positive (see
Table A2). EDU1 can then be interpreted as being a proxy of knowledge capital.
Table 4. Multinominal logit model for target firms.
Model 1: Pseudo R2
= 0.1195; Model 2: Pseudo R2
= 0.1606
Number of observations = 50917. Base group is no-M&A.
Intra-regional Inter-regional Cross-border Rearrangement
Model 1 Model 2 Model 1 Model 2 Model 1 Model 2 Model 1 Model 2
TURNOVER 0.488**
(8.13)
0.464**
(7.59)
0.526**
(12.20)
0.491**
(10.68)
0.709**
(11.13)
0.726**
(10.07)
0.660**
(10.68)
0.646**
(9.70)
NUMBER 0.414**
(7.74)
0.397**
(7.13)
-0.166**
(-5.02)
-0.145**
(-4.16)
-0.124**
(-2.09)
-0.075
(-1.20)
-0.031
(-0.56)
0.006
(0.11)
EDU1 0.555
(1.14)
-0.655
(-1.02)
0.471
(1.12)
-0.788
(-1.43)
1.266**
(2.43)
0.811
(1.33)
1.035
(1.09)
-0.073
(-0.05)
EDU2 0.998*
(1.65)
0.160
(0.24)
0.639
(0.84)
-0.255
(-0.30)
-1.072
(-0.62)
-1.584
(-0.84)
2.327**
(2.29)
1.986*
(1.79)
RDINT 0.149**
(2.24)
0.080
(1.16)
0.230**
(4.04)
0.177**
(2.82)
0.420**
(6.27)
0.372**
(4.94)
0.218**
(3.04)
0.113
(1.44)
FIXED -0.918**
(-2.38)
-1.171**
(-2.73)
-0.198
(-0.76)
-0.649**
(-2.14)
-0.657
(-1.51)
-0.928*
(-1.87)
-0.738
(-1.53)
-1.029*
(-1.87)
DEBT -0.395
(-1.60)
-0.331
(-1.39)
0.055
(0.78)
0.069*
(1.70)
-0.320
(-1.00)
-0.269
(-0.83)
-0.422
(-1.01)
-0.408
(-0.97)
PROFITS 0.018
(0.72)
0.017
(0.65)
-0.002
(-1.00)
-0.002
(-1.07)
-0.005**
(-3.01)
-0.005**
(-2.54)
-0.006**
(-2.31)
-0.007**
(-2.65)
AGE 0.008
(0.68)
0.020
(1.63)
0.008
(0.93)
0.014
(1.46)
-0.010
(-0.67)
-0.010
(-0.63)
0.003
(0.16)
0.006
(0.30)
FOREIGN -0.558**
(-2.46)
-0.432*
(-1.88)
-0.428**
(-2.13)
-0.311
(-1.51)
1.573**
(7.49)
1.623**
(7.30)
-0.515*
(-1.67)
-0.428
(-1.35)
MULTI 0.364**
(2.20)
0.292*
(1.73)
0.385**
(3.31)
0.367**
(3.16)
0.470**
(2.24)
0.384*
(1.84)
0.618**
(2.75)
0.615**
(2.73)
EXPORT -0.112
(-0.68)
0.211
(1.15)
0.257**
(2.19)
0.447**
(3.23)
0.482**
(2.20)
0.475**
(2.02)
0.543**
(2.29)
0.580**
(2.33)
Notes: z-stat in parentheses. ** (*) indicates that the parameter estimate is statistically significant at the 5
(10) percent significance level
21. 20
It is also remarkable that FOREIGN now has a very strong positive impact on the
probability of cross-border M&As as we have expected. The negative impact of PROFITS
is in line with the stated inefficient management hypothesis. The negative coefficient of
FIXED in the intra-regional category in Table 4 seems to contradict the results that are
reported in Table 3. This finding can, however, be interpreted as describing the fact that it is
relatively easy to evaluate the value of the target who is located far away and in whose
balance sheet fixed tangible assets have a big weight.
9. CONCLUSIONS
In this study – which applies a fairly new approach in the literature – we have estimated a
multilogit model for the probabilities that a firm will acquire or become a target in different
M&A categories, which are defined according to the location of an acquirer with respect to
the location of a target. According to the central findings of this study the firm
characteristics of an acquiring firm such as the high educational level of the staff, which can
be regarded as an indication of a good monitoring capacity, increases the probability of
M&As and, in particular, the probability of cross-border M&As. The high educational level
can also be interpreted as signalling good ability to internalise the potential synergies of
M&As. A firm’s R&D intensity, which may be a sign of good monitoring ability also
increases the probability of a cross-border M&A. This result can also indicate that the
knowledge capital, whose proxy RDINT is, can be commonly utilized even if an acquirer is
located far from a target.
As far as the probability that a firm becomes a target of an M&A is concerned, we
discovered that R&D in the firm’s possession also increases the probability that a firm is
acquired. We think that this result reflects the fact that geographical limits do not restrict the
common use of knowledge capital so easily or that it is possible to evaluate the value of
knowledge capital from afar, too. The result which states that the high educational level
(measured by EDU2) only increases the probability of close M&AS is interpreted to
describe the difficulties in monitoring the quality of human capital which is located far
away.
22. 21
APPENDIX A
Table A1. Multinominal logit model for acquirers.
Model 1: Pseudo R2
= 0.3016; Model 2: Pseudo R2
= 0.3353
Number of observations = 235192. Base group is no-M&A.
Intra-regional Inter-regional Cross-border
Model 1 Model 2 Model 1 Model 2 Model 1 Model 2
TURNOVER 0.567**
(18.42)
0.602**
(17.06)
0.655**
(22.74)
0.700**
(20.30)
0.829**
(19.20)
0.948**
(20.28)
NUMBER 0.464**
(10.41)
0.493**
(10.39)
-0.115**
(-3.23)
-0.057
(-1.50)
-0.040
(-0.81)
0.079
(1.41)
EDU1 1.370**
(4.64)
-0.081
(-0.20)
1.900**
(5.62)
-0.026
(-0.05)
4.201**
(13.84)
2.104**
(5.51)
EDU2 2.099**
(6.04)
1.030**
(2.46)
2.015**
(5.46)
0.985**
(2.38)
3.747**
(9.18)
2.294**
(4.35)
PATENTS1 -0.027
(-0.47)
-0.038
(-0.60)
-0.034*
(-1.69)
-0.037*
(-1.64)
-0.008
(-0.88)
-0.009
(-1.18)
PATENTS2 -0.193
(-0.93)
-0.206
(-0.94)
0.016
(0.69)
0.012
(0.54)
0.012
(0.41)
0.003
(0.11)
FIXED -0.067
(-0.23)
-0.847**
(-2.74)
-0.020
(-0.07)
-1.014**
(-3.43)
-2.238**
(-4.74)
-3.048**
(-5.35)
DEBT -0.948**
(-4.25)
-0.738**
(3.46)
-0.504**
(-2.70)
-0.142
(-0.87)
-2.465**
(-7.95)
-2.292**
(-6.97)
PROFITS -0.004**
(-2.73)
-0.003**
(-2.36)
-0.003**
(-2.48)
-0.003**
(-2.32)
-0.004**
(-2.97)
-0.003**
(-2.36)
AGE -0.016
(-1.61)
-0.003
(-0.32)
-0.039**
(-4.39)
-0.029**
(-3.14)
0.004
(0.26)
0.006
(0.38)
FOREIGN -0.311
(-1.59)
-0.114
(-0.58)
-0.140
(-0.83)
0.052
(0.31)
-1.825**
(-5.78)
-1.754**
(-5.42)
MULTI 0.844**
(5.76)
0.799**
(5.38)
1.238**
(9.50)
1.162**
(8.82)
0.666**
(3.48)
0.529**
(3.00)
EXPORT 0.360**
(2.60)
0.597**
(4.03)
0.631**
(5.29)
0.558**
(3.63)
1.976**
(11.97)
1.814**
(8.90)
INDUSTRY Not
included
Included Not
included
Included Not
included
Included
Notes: z-stat in parentheses. ** (*) indicates that the parameter estimate is statistically significant at the 5
(10) percent significance level.
24. 23
Table A3. Statistics for acquirers, data set which includes RDINT.
Number of observations 50883.
Mean Std. dev Min Max
TURNOVER 14.84 1.75 5.12 23.35
NUMBER 6.69 1.75 2.77 9.15
EDU1 0.06 0.15 0 1
EDU2 0.02 0.07 0 1
RDINT -0.79 1.57 -8.50 8.72
FIXED 0.29 0.22 0 1
DEBT 0.68 0.47 0 46.53
PROFITS -0.02 4.77 -588.29 2.41
AGE 13.62 6.63 1 25
FOREIGN 0.07 0.25 0 1
MULTI 0.31 0.46 0 1
EXPORT 0.46 0.50 0 1
Table A4. Statistics for acquirers, data set which does not include RDINT.
Number of observations 235188.
Mean Std. dev Min Max
TURNOVER 13.58 1.54 5.12 23.35
NUMBER 6.78 1.63 2.71 9.15
EDU1 0.03 0.12 0 1
EDU2 0.02 0.09 0 1
PATENTS1 0.05 1.66 0 317
PATENTS2 0.01 0.53 0 90
FIXED 0.25 0.22 0 1.35
DEBT 0.77 0.91 -1.62 191.00
PROFITS 0.02 4.37 -951 20.33
AGE 11.78 7.04 1 25
FOREIGN 0.03 0.17 0 1
MULTI 0.15 0.35 0 1
EXPORT 0.17 0.37 0 1
25. 24
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