Merger-Driven Listing Dynamics
with B. Espen Eckbo
Journal of Financial and Quantitative Analysis, Forthcoming
Abstract: Stock-market effectiveness in attracting and retaining firms under public ownership depends not only on stand-alone firms' net listing benefits but also on gains from merging with a public acquirer. Using a novel merger-adjusted listing count, we show that the dramatic (≈50%) post-1996 U.S. listing decline – previously attributed to declining listing benefits – is reversed as the "missing" firms de facto continue existing inside their public acquirers. Our merger adjustment also eliminates the U.S. listing gap, pointing instead to a distinct U.S. listing advantage: providing access to a well-functioning market for complex merger transactions.
Presentations: SFS Cavalcade North America; Midwest Finance Association; Financial Management Association; Finance, Organizations and Markets (FOM) Conference; Australasian Finance and Banking Conference; Nordic Initiative for Corporate Economics Conference; Boca Corporate Finance and Governance Conference; European Financial Management Association; World Finance Conference; Vietnam Symposium in Banking and Finance; International Young Finance Scholars Conference; The Finance Symposium; PhD Nordic Finance Workshop; Bergen Entrepreneurship and Finance Conference; Economics, Business, and Organization Research Conference; Humboldt University of Berlin; Iowa State University; Norwegian School of Economics (NHH); Oslo Metropolitan University; Tuck School of Business at Dartmouth; WU Vienna
Why Are Acquisitions of Unlisted Firms Better Deals? Evidence from OTC Markets
Single-authored (Job Market Paper)
Abstract: The extant literature shows that M&A bidder announcement returns are higher when targets are unlisted. Because of data limitations, the source of these gains – either that acquirers pay less or deal value creation is greater – remains elusive. I introduce a novel unlisted target type: firms with equity traded over the counter (OTC). I find that OTC target premiums are higher than in listed target deals and originate from shared synergy gains, consistent with improvements to targets’ access to capital. Both acquirer returns and offer premiums increase when OTC targets are closer to private than listed along a stock liquidity continuum, implying that these incremental bidder gains are not at target shareholders' expense.
Presentations (incl. scheduled): AFA Poster Sessions; FMA Doctoral Student Consortium; Australasian Finance and Banking Conference; Young Scholars Nordic Finance Workshop; Boston College PhD Seminar; Norwegian School of Economics (NHH); Texas Tech University; Tulane University; UNC Charlotte; University of Illinois Chicago; Virginia Tech
Impact Investing and Worker Outcomes
with Josh Lerner and Gordon Phillips
Abstract: Impact investors claim to distinguish themselves from traditional venture capital and growth equity investors by also pursuing ESG objectives. Whether they successfully do so in practice is unclear. We use confidential Census Bureau microdata to assess worker outcomes across portfolio companies. Consistent with earlier studies, impact investors are more likely than other private equity firms to fund businesses in economically disadvantaged areas, and the performance of these companies lags behind those held by traditional private investors. We show that post-funding impact-backed firms are more likely to hire minorities, unskilled workers, and individuals with lower historical earnings, perhaps reflecting the higher representation of minorities in top positions. They also allocate wage increases more favorably to women and minorities than VC-backed firms and other matched small firms. Our results are consistent with impact investors and their portfolio companies acting according to non-pecuniary social goals.
Presentations (incl. scheduled): FIRS; Advances in Venture Capital and Private Equity Research Workshop
Debt and Equity Crowdfunding in the Financial Growth Cycle
with Matteo Pirovano, Davide Sinno, and Trang Vu
Abstract: Since 2016, US firms can offer securities to retail investors via crowdfunding platforms. We argue that crowdfunding, by hybridizing design elements of public and private securities, provides unique financing opportunities. We investigate firms’ choice between issuing crowdfunded debt and equity and relate this to their stage in the financial growth cycle and access to bank financing. Firms that are less profitable, are in an earlier developmental stage, and have stronger ties to the banking system are more likely to issue crowdfunded equity than debt. Successful crowdfunding is associated with increases in firm size, revenue, and profitability for early-stage firms, but not late-stage ones. Our findings are consistent with crowdfunding alleviating capital constraints for startups with less access to traditional financing.
Presentations (incl. scheduled): Swiss Finance Institute Research Days; Bocconi University; Norwegian School of Economics (NHH); Università della Svizzera italiana (USI)
The Road to Superstardom: Sources of Growth
with B. Espen Eckbo and Gordon Phillips