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Corporate Finance Workshop

Thursday, 4 May 2017
12:30 to 16:00
Room 405, Durham University Business School

Organised by the Centre for Banking, Institutions and Development (CBID). Speakers: Professor Nihat Aktas (WHU – Otto Beisheim School of Management) and Professor Marc Goergen (Cardiff Business School).


12:30-13:30 – Buffet Lunch (Lounge)

13:30-14:30 – Professor Nihat Aktas (WHU – Otto Beisheim School of Management): 'She Is Mine': Determinants and Value Effects of Early Announcements in Takeovers.

Abstract: Some bidders voluntarily announce a merger negotiation before the definitive agreement. We propose an "announce-to-signal" explanation to these early announcements: they allow bidders to signal to the target shareholders high synergies so as to overcome negotiation frictions and improve success rates. However, signaling raises the target's reservation price. In equilibrium, bidders tradeoff success rates and costs. Consistent with signaling, we show that bidders' weak bargaining position predicts earlier announcements. Early announced transactions are associated with higher expected synergies, completion rates, as well as higher public competition and offer premium. However, bidder announcement returns do not suggest overpayment in these transactions.

14:30-15:00 – Tea/Coffee break (Lounge)

15:00-16:00 – Professor Marc Goergen (Cardiff Business School): Why female board representation matters: The role of female directors in reining in male CEO overconfidence

Abstract: We provide several novel manifestations why female board representation matters and how women on boards affect corporate decisions and performance. We find that male CEOs at firms with female directors are less likely to be overconfident as they hold fewer deep-in-the-money options. We also find that female directors are associated with less aggressive investment policies, better acquisition decisions, and ultimately improved firm performance. This is the case for industries with high overconfidence prevalence, but not for those with low overconfidence prevalence. These results are consistent with the view that female board representation improves firm outcomes through reducing overconfidence in male CEOs.

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