دانلود رایگان مقاله انگلیسی مالکیت متقابل سازمانی و استراتژی شرکت: مورد ادغام ها و اکتساب ها - الزویر 2018

Abstract

This article provides new evidence on the important role of institutional investors in affecting corporate strategy. Institutional cross-ownership between two firms not only increases the probability of them merging, but also affects the outcomes of mergers and acquisitions (M&As). Institutional cross-ownership reduces deal premiums, increases stock payment in M&A transactions, and lowers the completion probabilities of deals with negative acquirer announcement returns. Furthermore, deals with high institutional crossownership have lower transaction costs and disclose more transparent financial statement information. The effect of cross-ownership on the total deal synergies and post-deal longterm performance is positive, which can be attributed to independent and non-transient cross-owners. Our findings are robust after mitigating the cross-ownership asymmetry concern. Overall, our results suggest that the growth of institutional cross-holdings in U.S. stock markets may greatly change corporate strategies and decision-making processes.

6 Conclusions

Institutional investors have been demonstrated to play an important role in the financial markets and have an impact on a variety of corporate strategies. But few studies have shown how institutional investors affect firms’ acquisition behavior and performance. We investigate the impact of institutional cross-ownership, where the same set of institutional investors has significant stakes in both acquirers and targets, on various aspects of deal outcomes in M&As. Two types of institutional cross-ownership measures are studied in our empirical analysis: the percentage of shareholdings and the number of cross-owners.

We first show that institutional cross-ownership between two firms increases the likelihood of them merging. Then we show that institutional cross-ownership affects various deal characteristics and performance. We find that institutional cross-ownership reduces deal premiums, thus leading to better value for acquirers. Deals with high institutional cross-ownership tend to involve more stock as the method of payment. Cross-ownership diminishes the likelihood of bad deal completion, enhances deal synergies and is positively related to the long-run performance of the merged entities from both fundamental (operating) and stock market perspectives. We also find a negative relationship between institutional cross-ownership and deal transaction costs. Institutional cross-owners help reduce deal uncertainty by limiting earnings misreporting. Our results suggest that institutional cross-owners benefit acquirers by providing them with an information advantage about the true value of the target firm and more bargaining power in deal negotiations. Besides the positive effect of institutional cross-ownership on deal outcomes, we also document a positive relationship between cross-ownership and total deal performance, measured by the deal synergy and long-run performance. Overall we conclude that cross-ownership improves the quality of mergers, a finding which we attribute to the superior two-sided information, better monitoring role and stronger negotiating power of such investors compared with those who operate only on one side of the deal.