The Operating Performance of Firms Conducting Seasoned Equity Offerings

We examine the dynamic behavior of bank capital using a global sample of 64 countries during the 1994-2010 period. Banks achieve deleveraging through active capital management (equity growth) rather than asset liquidation. In contrast, they achieve leveraging through passive capital management (reduced earnings retention) and substantial asset expansion (but also cash hoarding). The speed of capital structure adjustment is heterogeneous across countries. Banks make faster capital structure adjustments in countries with more stringent capital requirements, better supervisory monitoring, more developed capital markets, and high inflation. In times of crises, banks adjust their capital structure significantly more quickly.

Bank capital management: International evidence

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Boards That Make A Difference

This study constructs a model of the determinants of earnings announcement tone in order to examine the impact of CEO power on earnings announcement tone. An interaction term between CEO power and board monitoring is used to test whether effective board oversight moderates the strength of the association between CEO power and earnings announcement tone. Following prior research, we measure earnings announcement tone as the spread in the proportion of positive and negative words in the announcements. CEO power is assessed across two dimensions: (1) expert power (CEO tenure) and (2) structural power (CEO-chairman duality). We use board independence, meeting frequency, and board meeting attendance to measure the effectiveness of board oversight. We find that earnings announcement tone is significantly positively associated with CEO tenure and CEO duality. The effect of CEO tenure is weaker when board oversight is stronger, especially when board members have higher reputation costs, whereas the effect of CEO duality is unchanged by board oversight mechanisms. The empirical evidence is broadly consistent with the notion that powerful CEOs use a more optimistic and aggressive tone in their earnings’ announcements and that stronger board oversight is effective in constraining overt aggressiveness in the earnings announcements issued by CEOs with longer tenure but not those issued by dual-role CEOs. The results are robust to several sensitivity tests. Finally, this study identifies CEO power and board oversight as previously unrecognized determinants of tone in earnings announcements.

CEO power, board oversight, and earnings announcement tone

CEO duality, information costs, and firm performance

https://onlinelibrary.wiley.com/doi/pdf/10.1002/ijfe.2089

Board gender diversity and firm performance: The UK evidence

In this paper, we employ board monitoring mechanisms and within-firm governance variables to investigate the operating performance of 340 mergers and acquisitions in China over the 2004–2011 period. Our results document a significant deterioration in post-acquisition operating performance of acquiring firms over 12–36 months. We find independent directors, managerial shareholding, ownership concentration have a positive and significant impact on operating performance of acquiring firms. However, the related party transactions exert a negative and significant effect on matched control adjusted ROA. Further analysis of our sub-sample indicates that privately owned enterprises are better monitors compared to the state owned enterprises.

/pdf/the-impact-of-firm-ownership-board-monitoring-on-operating-e49n58uudj.pdf

The impact of firm ownership, board monitoring on operating performance of Chinese mergers and acquisitions

Politically connected boards, ownership structure and credit risk: Evidence from Chinese commercial banks

The purpose of this paper is to examine the effects of bank ownership structure and ownership concentration on credit risk.,Using panel data on a sample of 88 Chinese commercial banks, with 826 observations over a period of 2003–2018, this study has applied system generalised method of moments regression to examine the impact of bank ownership structure and ownership concentration on credit risk. This study has used two measures of credit risk, which are non-performing loan ratio (NPLR) and loan loss provision ratio (LLPR).,The results show that ownership type (both government and private ownership) exerts a positive and significant impact on credit risk. Measuring ownership concentration using Herfindahl–Hirchmann Index, the results indicate that concentration of ownership in the hands of government has a negative and significant effect on credit risk, whereas private ownership concentration positively impacts credit risk. Overall, the findings suggest that concentration of ownership in government hands reduces risk; however, private ownership concentration exacerbates credit risks. The results are invariant to both measures of credit risk, before and after the financial crisis.,The findings provide useful insight to guide policy decisions in Chinese banks’ lending policies and bank ownership.,Using two ex post measures of credit risk, NPLR and LLPR, and one ownership concentration measure, HHI, this study deepens our understanding on the effectiveness of Chinese banks’ corporate governance reforms on managing credit risks.

/pdf/impact-of-ownership-structure-and-ownership-concentration-on-5ecl85tw5b.pdf

Impact of Ownership Structure and Ownership Concentration on Credit Risk of Chinese Commercial Banks

Purpose




The purpose of this paper is to investigate the motivation and post-merger operating performance (OP) of European utility sectors following mergers and acquisitions (M&A).




Design/methodology/approach




Motives behind M&A are examined by looking into the relationships between total gains, target gains and acquirer gains. Post-merger OP is measured by comparing the sample of European utilities with a matched portfolio based on size and market to book ratio with respect to five accounting indicators: growth in turnover, growth in earnings before interest and tax, return on assets, net profit margin and growth in fixed assets.




Findings




Synergy is the primary motive for M&A in the European utility firms. This study also found that post-merger OP is negative and significant across all the five accounting indicators matched by size, and market to book ratio suggesting that utility mergers underperform in the long term. The findings suggest that gains accruing to utilities involved in acquisitions are short term in nature.




Practical implications




Negative post-merger OP bears important policy implications as in future antitrust/competition authorities should be more vigilant before approving utility mergers.




Originality/value




Public utilities possess several characteristics that are different from industrial firms and therefore need to be examined separately. Empirical literature on M&A is very limited on utilities. This study has addressed this gap by examining the motivation and post-merger OP of the European utility firms.

/pdf/motives-of-mergers-and-acquisitions-in-the-european-public-5946l8g68u.pdf

Sanjukta Brahma

Papers

Board gender diversity and firm performance: The UK evidence

The impact of firm ownership, board monitoring on operating performance of Chinese mergers and acquisitions

Politically connected boards, ownership structure and credit risk: Evidence from Chinese commercial banks

Impact of Ownership Structure and Ownership Concentration on Credit Risk of Chinese Commercial Banks

Motives of mergers and acquisitions in the European public utilities: an empirical investigation of the wealth-anomaly