Two Essays on Corporate Asset Purchases
Date Issued
2007
Date
2007
Author(s)
Chen, I-Ju
DOI
en-US
Abstract
This doctoral dissertation contains two essays on the corporate asset purchases. The first essay examines a sample of diversified firms that announce asset purchases between 1984 and 2003. The empirical evidence shows that diversified firms are valued at a discount prior to the asset purchase and the value discount significantly increases following the transaction. We also find that the value loss mainly results from the diversified firms increasing their diversity and these firms experience significantly value discount following the asset purchase. In addition the changes in excess value around the asset purchase are noted to be positively related to changes in measures of investment efficiency. The results generated in this study support the diversity cost hypothesis. We also provide the evidence that rent-seeking behavior across divisions for diversified firms plays a crucial role in capital allocations. This allocation distortion contributes to the major source of the value discount for diversified firms.
The second essay empirically investigates the relationship among the corporate governance, investment efficiency, and the excess value of diversified firms. Using a sample of diversified firms that announced asset purchases between 1988 and 2003, we find that diversified firms with better governance structure improve their investment efficiencies post asset purchases. The characteristics of well-governed diversified firms include larger board size, higher board independence, less busy board, higher institutional ownership, higher outside director ownership, higher CEO equity-based pay, better audit quality, and better shareholder’s protection. The empirical evidence indicates that the changes in investment efficiency are associated with the problem of cross-subsidization among divisions within diversified firms. Our study documents that governance has a substantial impact on the excess value of diversified firms through its impact on investment efficiency.
Subjects
資產購買
多角化公司價值
多角化成本假說
公司治理
投資效率性
內部資金市場
asset purchase
diversification discount
internal capital market
diversity cost hypothesis
corporate governance
investment efficiency
Type
thesis