Prior studies contend that an unexpected increase in inventory reflects a firm’s difficulty in generating sales and results in negative earnings growth and stock returns. Using a sample with over 85,000 observations for the period of 1950-2005, we confirm the negative relation between...

Purpose – The purpose of this paper is to examine the effect of the passage of the Sarbanes-Oxley Act (SOX) on a number of governance and governance-related characteristics, such as board structure and committee composition, as well as the effect of those changes (if any) on both accounting...

Purpose – The purpose of this paper is to examine the impact of the distance between the acquiror and the target on merger outcomes. Design/methodology/approach – The authors use the distance between acquiror and target headquarters for a sample of 134 Canadian mergers to proxy for the...

Purpose -The purpose of this paper is to review recent research on the structure of equity ownership and its impact on firm value. In doing so, the paper outlines the main issues, surveys the more recent work, and highlights the most promising developments on this topic....

We analyze the influence of the level as well as the change in family ownership on value creation in mergers involving newly public firms. Our findings suggest that acquirers with low levels of family ownership earn lower abnormal returns than do those with high levels of ownership. In addition,...

We empirically examine earnout contracts, which provide for contingent payments in acquisition agreements. Our analysis reveals considerable heterogeneity in the potential size of the earnout, the performance measure on which the contingent payment is based, the period over which performance is...

Material-Adverse-Change clauses (MACs) are present in over 90% of acquisition agreements. These clauses are the outcome of extensive negotiation and exhibit substantial cross-sectional variation in the number and types of events that are excluded from being ‘material adverse events’ (MAEs)....

Firms that intentionally increase leverage through substantial debt issuances do so primarily as a response to operating needs rather than a desire to make a large equity payout. Subsequent debt reductions are neither rapid, nor the result of pro-active attempts to rebalance the firm’s capital...

We analyze target firm valuations disclosed in the fairness opinions of negotiated mergers between 1998 and 2005. On average, acquirer advisors exhibit a greater degree of valuation optimism than do target advisors. Top-tier advisors produce more accurate valuations than lower-tier advisors, but...