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We develop and test the Acquisition Probability Hypothesis, which asserts that rivals of initial acquisition targets earn abnormal returns because of the increased probability that they will be targets themselves. On average, rival "rms earn positive abnormal returns regardless of the form and outcome of acquisition. These returns increase signi"cantly with(More)
The liquidity of the market for corporate assets plays an important role in explaining whether a firm divests a business segment, which segment the firm divests, and whether it divests a core segment or an unrelated segment. Firms are more likely to divest segments from industries with a more liquid market for corporate assets, unrelated segments, poorly(More)
Using a sample of firm years from the United States, Germany and Japan, we examine the effect of bank power on the cash holdings of industrial firms. We show that firms in Japan have higher cash holdings than those in the U.S. or Germany. We also show that the high cash levels are correlated with power of the banks. During periods of high bank power, firms’(More)
  • Simeon Djankov, Jan Jindra, +9 authors Karen Wruck
  • 1999
We examine the valuation effect of a bank's insolvency on related industrial firms. Our sample includes 29 insolvent banks in Indonesia, Korea, and Thailand that serve as main creditors for 269 publicly traded companies. Our findings suggest that a bank relationship adds value to a firm, and that investor confidence in bank-related firms depends on(More)
Previous studies offer a mixed understanding of the economic role of stock repurchases. This paper investigates three key economic motivations mispricing, disgorgement of free cash flow and increasing leverage in the context of both the initial market reaction and long-run returns. The initial reaction provides some support for the mispricing story.(More)
  • Jan Jindra, Ralph A. Walkling, +6 authors Karen Wruck
  • 2000
This paper examines speculation spreads following initial acquisition announcements in 362 cash tender offers spanning the 1981-1995 period. Speculation spreads in acquisitions, defined as the percentage difference between the bid price and market price one-day after the initial announcement, exhibit a positive mean, with considerable cross-sectional(More)
The Lehman bankruptcy highlights the potential for interconnectedness to cause negative externalities through counterparty contagion, but the externalities may also arise from information contagion. We examine troubled financial firms and find that both channels are significant factors in creating spillover effects. Counterparty contagion is greater in(More)
The Journal of Finance web site disseminates research expediently to a broad audience. Papers were downloaded more than 284,000 times from November 1997 to November 1999. The average paper received 85 downloads per month and was available 10 months before publication. Papers in “General Financial Markets” are downloaded more frequently than other subjects,(More)