One of the most consequential events in any firm’s lifetime is a major acquisition. Because of their importance, mergers and acquisitions (M&A) have been researched extensively. The vast majority of research and survey papers have focused on domestic deals. However, cross-border M&A constitutes about 30% of the total number and 37% of the total volume… Read More »
The vast majority of mergers and acquisitions (M&As) in recent years employ fairness opinions (FOs). FOs are provided by an outside advisor (typically an investment bank) and reflect the advisor’s opinion that the terms of the transaction are “fair” to the shareholders from a financial perspective. To justify their opinion, the advisor performs valuation analyses… Read More »
Accounting is conservative. Under Generally Accepted Accounting Principles (GAAP), a firm should recognize losses before the losses are realized but postpone the recognition of gains until the gains are realized. In other words, the conservative accounting principle promotes timely loss recognition at the expense of timely gain recognition. However, in debt contracting, where lenders and… Read More »
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