The Economic Consequences of Financial Restatements: Evidence from the Market for Corporate Control

Amel‐Zadeh, Amir; Zhang, Yuan

doi:10.2139/ssrn.2141143

Cited by 15 publications

(44 citation statements)

References 60 publications

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“…Our sample construction process closely follows Amel‐Zadeh and Zhang (), who examine the M&A activities of firms that have issued accounting restatements. We collect data on corporate governance from Compustat Executive Compensation (Execucomp) and Riskmetrics Director and Governance Databases .…”

Section: Research Design: Data Collection and Sample Constructionmentioning

confidence: 99%

“…Prior empirical evidence shows that prospective bidders tend to avoid potential targets with large contingent liabilities (Cocco & Volpin 2013) and high information uncertainty (Amel-Zadeh & Zhang 2015). For example, Cocco and Volpin (2013) find that firms sponsoring defined benefit pension plans are less likely to be acquired because of the reluctance of potential bidders to inherit considerable and inestimable contingent liabilities.…”

Section: A Corporate Litigation and Takeover Likelihoodmentioning

confidence: 99%

“…For example, Cocco and Volpin (2013) find that firms sponsoring defined benefit pension plans are less likely to be acquired because of the reluctance of potential bidders to inherit considerable and inestimable contingent liabilities. Bidders can also be deterred by uncertainty such as that arising from accounting restatements (Amel-Zadeh & Zhang 2015).…”

Section: A Corporate Litigation and Takeover Likelihoodmentioning

confidence: 99%

“…Firms may structure a deal as a purchase of individual assets to avoid legal liabilities being carried forward (Amel‐Zadeh & Zhang ). However, environmental liabilities are unique in the sense that some liabilities (such as those arising from soil contamination) pursue the property and subsist even after the legal personality of a corporation is extinguished.…”

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confidence: 99%

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Who Acquires Toxic Targets?

Liu

Yawson

2018

J Empirical Legal Studies

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We examine the consequences of environmental lawsuits in the market for corporate control. Using a sample of lawsuits filed in the U.S. federal courts, we document that environmental litigation reduces sued firms’ bidding activities during the subsequent three years. Purchasing targets that have been sued for environmental violations is value destroying for acquirers, as evidenced by their announcement‐date returns. Finally, firms with poor corporate governance are more likely to acquire such “toxic” targets. Our empirical results are robust to falsification tests using securities and contractual lawsuits, controlling for endogeneity using an instrumental variable approach, propensity score matching, employing an alternative lawsuit sample, and alternative control variables and model specifications. Our findings have significant implications for policymakers, corporate executives, and environmental interest groups.

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Section: Research Design: Data Collection and Sample Constructionmentioning

confidence: 99%

Section: A Corporate Litigation and Takeover Likelihoodmentioning

confidence: 99%

Section: A Corporate Litigation and Takeover Likelihoodmentioning

confidence: 99%

mentioning

confidence: 99%

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Who Acquires Toxic Targets?

Liu

Yawson

2018

J Empirical Legal Studies

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“…Amel‐Zadeh and Zhang () analyze financial restatement and support the information risk approach. They show that firms that have restated their financial reports will less likely become takeover targets and that their deal value is lower if a transaction occurs.…”

Section: Literature Reviewmentioning

confidence: 99%

Litigation risk: Measurement and impact on M&A transaction terms

Bruslerie

Maux

2018

Business Fin & Account

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The purpose of the paper is to propose an original proprietary proxy of a firm's litigation risk. We extend the scope of litigation risk outside of the conflicts with shareholders and the domain of security litigation. We demonstrate that the source of the risk of litigation can be found in the firm's policies and in its management's operational or strategic decisions, even if a sector conditioning effect exists. Based on a sample of 465 US M&A transactions between 2000 and 2014, we provide evidence that the level of litigation risk, at the acquirer's level, has a positive and significant impact on the takeover premium. We also provide evidence that a significant relationship exists between the acquirer's litigation risk and the means of payment. An extension of the sample to international transactions is used as a robustness check; it confirms the previous results.

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Abandonment of mergers and acquisitions: a review and research agenda

Kumar

Sengupta

2020

IJOEM

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PurposeThe purpose of this study is to provide a broad understanding of the pre-completion stage and subsequent abandonment of mergers and acquisitions (M&As).Design/methodology/approachA total of 117 peer-reviewed, English language articles published in scholarly journals were considered in the review. The approach includes a descriptive evaluation of the literature, coupled with content analysis. The paper uses both positivist and constructivist approaches to qualitative research. The analysis is conducted with the help of R programming and Gephi visualization software. The authors organize the work around the event of outcome/closure of deal proposal.FindingsIt is found that earlier studies sampled on domestic M&As in developed economies (DEs). However, the interest of scholars has increased in cross-border deals and emerging economies (EEs) in the last decade. Various factors interact and facilitate the completion/abandonment of good and bad deals. The authors find that complex non-linear relationships exist, and there is a need for studies with other classification techniques focusing on predictive accuracy.Research limitations/implicationsThe literature review is limited to articles available to the researcher using search terms related to M&A completion/termination. The databases accessed were: ProQuest, Scopus and Web of Science. However, backward snowballing was performed to avoid the omission of relevant articles.Originality/valueThe findings and subsequent discussions familiarize researchers and practitioners with an overview of research undertaken in the field of M&A abandonment. The authors find voids within the literature and suggest future research agendas.

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The Economic Consequences of Financial Restatements: Evidence from the Market for Corporate Control

Cited by 15 publications

References 60 publications

Who Acquires Toxic Targets?

Who Acquires Toxic Targets?

Litigation risk: Measurement and impact on M&A transaction terms

Abandonment of mergers and acquisitions: a review and research agenda

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