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postgraduate thesis: Essays on acquisition of newly listed firms and managerial compensation

TitleEssays on acquisition of newly listed firms and managerial compensation
Authors
Advisors
Advisor(s):Zhou, X
Issue Date2014
PublisherThe University of Hong Kong (Pokfulam, Hong Kong)
Citation
Pan, L. [潘璐瑶]. (2014). Essays on acquisition of newly listed firms and managerial compensation. (Thesis). University of Hong Kong, Pokfulam, Hong Kong SAR. Retrieved from http://dx.doi.org/10.5353/th_b5295523
AbstractThis thesis consists of two essays in corporate finance, one on newly listed firms’ post-IPO activities as acquisition targets and the other on corporate executive compensation. In the first essay, I examine a large sample of U.S. newly listed firms to analyze their likelihood of becoming a takeover target. I find that 27 percent of newly listed firms are acquired within five years after the IPO, which is compared with the seasoned-firm counterpart of 17 percent. This difference is economically large, statistically significant, and robust to various firm and market characteristics controls. Several recent studies have reported newly listed firms’ active activities as an acquirer. Contributing to this literature, my finding further identifies an active role of IPO firms as a takeover target. My finding is consistent with the presumed motivation of firms’ going public for a “double-exit” strategy: To sell the shares through a takeover after the company goes public. Economic rationales for this strategy include advantages from auctioning off a minority stake to dispersed shareholders and more efficient bargaining in takeover negotiations due to increased share liquidity and reduced uncertainty after the IPO. Therefore, going public can be an optimal first step in the process of selling a company. In further support of this motivation, I find that IPO firms, as an acquisition target, receive higher takeover premiums than do comparable privately held targets and seasoned target firms. In conclusion, my findings are consistent with the double-exit strategy predicted by theory, suggesting that IPOs facilitate subsequent sales of the companies and that the strategy is economically justified. In the second essay, I study executive compensation under the Japanese corporate governance system. In March 2010, the Japanese regulator enacted the first legislation regarding the disclosure of director compensation to named individuals. With access to the first publicly available data for Japanese executives, I document comprehensive evidence on the level, structure, and mechanisms of CEO compensation. My findings reveal Japanese practices in CEO pay that differ from the well-known Anglo-American model in significant ways. Its distinct features include base salary dominance and unusually low levels of pay and pay variation. I also identify significant impacts on the compensation system of corporate governance and U.S. influence factors, such as keiretsu groups, financial institutions, US-style compensation committees, and cross-listing on US stock exchanges.
DegreeDoctor of Philosophy
SubjectExecutives - Salaries, etc
Consolidation and merger of corporations
Dept/ProgramEconomics and Finance
Persistent Identifierhttp://hdl.handle.net/10722/202373

 

DC FieldValueLanguage
dc.contributor.advisorZhou, X-
dc.contributor.authorPan, Luyao-
dc.contributor.author潘璐瑶-
dc.date.accessioned2014-09-18T02:28:15Z-
dc.date.available2014-09-18T02:28:15Z-
dc.date.issued2014-
dc.identifier.citationPan, L. [潘璐瑶]. (2014). Essays on acquisition of newly listed firms and managerial compensation. (Thesis). University of Hong Kong, Pokfulam, Hong Kong SAR. Retrieved from http://dx.doi.org/10.5353/th_b5295523-
dc.identifier.urihttp://hdl.handle.net/10722/202373-
dc.description.abstractThis thesis consists of two essays in corporate finance, one on newly listed firms’ post-IPO activities as acquisition targets and the other on corporate executive compensation. In the first essay, I examine a large sample of U.S. newly listed firms to analyze their likelihood of becoming a takeover target. I find that 27 percent of newly listed firms are acquired within five years after the IPO, which is compared with the seasoned-firm counterpart of 17 percent. This difference is economically large, statistically significant, and robust to various firm and market characteristics controls. Several recent studies have reported newly listed firms’ active activities as an acquirer. Contributing to this literature, my finding further identifies an active role of IPO firms as a takeover target. My finding is consistent with the presumed motivation of firms’ going public for a “double-exit” strategy: To sell the shares through a takeover after the company goes public. Economic rationales for this strategy include advantages from auctioning off a minority stake to dispersed shareholders and more efficient bargaining in takeover negotiations due to increased share liquidity and reduced uncertainty after the IPO. Therefore, going public can be an optimal first step in the process of selling a company. In further support of this motivation, I find that IPO firms, as an acquisition target, receive higher takeover premiums than do comparable privately held targets and seasoned target firms. In conclusion, my findings are consistent with the double-exit strategy predicted by theory, suggesting that IPOs facilitate subsequent sales of the companies and that the strategy is economically justified. In the second essay, I study executive compensation under the Japanese corporate governance system. In March 2010, the Japanese regulator enacted the first legislation regarding the disclosure of director compensation to named individuals. With access to the first publicly available data for Japanese executives, I document comprehensive evidence on the level, structure, and mechanisms of CEO compensation. My findings reveal Japanese practices in CEO pay that differ from the well-known Anglo-American model in significant ways. Its distinct features include base salary dominance and unusually low levels of pay and pay variation. I also identify significant impacts on the compensation system of corporate governance and U.S. influence factors, such as keiretsu groups, financial institutions, US-style compensation committees, and cross-listing on US stock exchanges.-
dc.languageeng-
dc.publisherThe University of Hong Kong (Pokfulam, Hong Kong)-
dc.relation.ispartofHKU Theses Online (HKUTO)-
dc.rightsThe author retains all proprietary rights, (such as patent rights) and the right to use in future works.-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subject.lcshExecutives - Salaries, etc-
dc.subject.lcshConsolidation and merger of corporations-
dc.titleEssays on acquisition of newly listed firms and managerial compensation-
dc.typePG_Thesis-
dc.identifier.hkulb5295523-
dc.description.thesisnameDoctor of Philosophy-
dc.description.thesislevelDoctoral-
dc.description.thesisdisciplineEconomics and Finance-
dc.description.naturepublished_or_final_version-
dc.identifier.doi10.5353/th_b5295523-

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