Dissertation
Essays related to mergers and acquisitions
University of Iowa
Doctor of Philosophy (PhD), University of Iowa
Summer 2025
DOI: 10.25820/etd.008159
Abstract
A growing body of literature has studied the performance of mergers and acquisitions. The decision-making processes typically involve multiple board directors and company executives over an extended timeline. A variety of factors can influence the outcomes of merger and acquisition transactions. In my dissertation, I examine how interpersonal relationships among directors can impact the short-term performance of mergers and acquisitions, as well as how accounting disclosure decisions influence post-acquisition competition.
In Chapter 1, I examine the influences of social connections within acquiring firms and across acquiring and target companies on the merger and acquisition outcomes of the acquirers before and after the enactment of the Dodd-Frank Act. I find that the social ties within the acquiring firm have a significantly negative impact on the acquirer's short-term acquisition returns before the implementation of the Dodd-Frank Act. The effect became significantly positive after the enactment of the Dodd-Frank Act. Social ties across the acquirer and the target have no significant influence on the acquirer's announcement returns during the entire sample period. Moreover, the acquirer's internal social ties are negatively associated with its announcement returns, both in terms of educational background and previous employment networks, before the enactment of the Dodd-Frank Act. The impacts are positive after its enactment. Furthermore, internal social ties related to the acquirer's CEO or independent directors also exhibit the adverse effects on acquirer returns before the implementation of the Dodd-Frank Act, but the impacts become insignificant after its implementation. Overall, the evidence suggests that social connections within the acquirer contribute to irrational merger and acquisition decision-making and diminished returns for the acquirer's shareholders before the implementation of the Dodd-Frank Act. The act enhances the corporate governance practices of the acquirer's directors and executives. Therefore, the acquirer's internal social connections lead to higher value creation for the acquirer's shareholders after the enforcement of the Dodd-Frank Act.
Chapter 2 examines the impact of shared board members between acquirers and targets on the short-term outcomes of mergers and acquisitions. I find that acquirers, targets, and the combined firms obtain lower announcement returns in transactions when the extent of shared board member connections across the acquirer and the target increases. Moreover, there is more substantial evidence that the target firms experience significant value destruction at the time of the transaction announcement compared to the results of the acquiring firms and the combined firms. Additionally, the acquirer's CEO serving as a board member can help mitigate the value loss for the acquirer's shareholders at the time of the transaction announcement.
Exploring the effects of voluntary disclosures is a longstanding topic in accounting literature. Chapter 3 examines the impact of M&A-related voluntary disclosures on post-merger competition. There are two significant obstacles to estimating the effects. First, voluntary disclosures suffer from selection bias, which is raised by both accounting disclosure regulations and the managers of acquiring firms. This chapter applies two strategies to address the selection bias. The first one is to estimate the average treatment effects through weighting and matching methods under the ignorability condition. This condition can be achieved by controlling sufficient covariates that capture characteristics used for accounting disclosures. The second strategy employs an instrumental variable that indicates the year of a regulation amendment. Another challenge is the lack of direct measurement for competition. This chapter compares five proxies for both market and individual firm-level competition. The overall empirical results suggest that M&A-related voluntary disclosures reduce aggregate competition faced by disclosing acquirers in a market-level sense.
Details
- Title: Subtitle
- Essays related to mergers and acquisitions
- Creators
- Xinran Bi
- Contributors
- Suyong Song (Advisor)David E Frisvold (Committee Member)Anil Kumar (Committee Member)Tong Yao (Committee Member)
- Resource Type
- Dissertation
- Degree Awarded
- Doctor of Philosophy (PhD), University of Iowa
- Degree in
- Economics
- Date degree season
- Summer 2025
- DOI
- 10.25820/etd.008159
- Publisher
- University of Iowa
- Number of pages
- xi, 126 pages
- Copyright
- Copyright 2025 Xinran Bi
- Language
- English
- Date submitted
- 07/23/2025
- Description illustrations
- color illustrations
- Description bibliographic
- Includes bibliographical references (pages 93-99).
- Public Abstract (ETD)
Mergers and acquisitions are common strategies employed by large firms to accomplish strategic objectives and expand their business. The process of deciding whether to merge or acquire another company is often a complex one. It involves multiple individuals over an extended period of time. Specifically, one major challenge is evaluating whether such acquisitions have been successful. My research examines how the interactions between a company s board of directors and its top executives will affect outcomes for these acquisitions. Interestingly, in the short term, both acquiring and target firms can experience declines in their value due to different forms of social connections. Nonetheless, suppose companies disclose information about acquisitions after the transactions are completed. In that case, it is possible to improve their chances of success.
- Academic Unit
- Economics
- Record Identifier
- 9984948427602771
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