Essays on Acquisition of Newly Listed Firms and Managerial Compensation

Download or read book Essays on Acquisition of Newly Listed Firms and Managerial Compensation written by Luyao Pan and published by Open Dissertation Press. This book was released on 2017-01-27 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, "Essays on Acquisition of Newly Listed Firms and Managerial Compensation" by Luyao, Pan, 潘璐瑶, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This 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. DOI: 10.5353/th_b5295523 Subjects: Executives - Salaries, etc Consolidation and merger of corporations