FINC3013 Lecture Notes - Lecture 1: Human Capital, Pension, 1997 Asian Financial Crisis
31 Jul 2018
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Japan experienced massive growth in total deal value i(cid:374) late (cid:858)90s (cid:271)efo(cid:396)e asia(cid:374) fi(cid:374)a(cid:374)(cid:272)ial c(cid:396)isis: china experiencing massive growth in total deal value and volume since gfc. Do merger if gains > costs of merger. Costs include: cash payments to target stockholders, securities (may dilute equity, other fees, e. g. printers. Increased market power: network externalities: accessing previously inaccessible markets, acquisition of complementary products and companies. Increased debt capacity and tax shields, lower cost of debt. Ceo is able to be retained after takeover, acquisition premium decreases as position is less important: corporate governance solutions for agency problems. Finc3013 mergers and acquisitions: board of directors as monitor (especially indpt members) Large shareholders as monitors (cid:894)s(cid:373)all sha(cid:396)eholde(cid:396)s do(cid:374)(cid:859)t ha(cid:448)e (cid:373)u(cid:272)h i(cid:374)(cid:272)e(cid:374)ti(cid:448)e to monitor: use of debt (lots of debt = high discipline, executive compensation (need to align interests of directors and shareholders optimally) Input and product markets competition (will discipline manager: capital markets as monitors: markets for corporate control.
