Profitability and Characteristics of Risk Arbitrage: Evidences from Leveraged Buyouts in the U.S. Sue Fung Wang, Kehluh Wang, Chiu Nan Tsai National Chiao.

Slides:

Advertisements

Similar presentations

Leveraged Buyouts and Management Buyouts

Advertisements

Lecture-1 Financial Decision Making and the Law of one Price

1 CHAPTER 25 Mergers, LBOs, Divestitures, and Holding Companies.

1 Complete Markets. 2 Definitions Event State of the world State Contingent Claim (State Claim)  Payoff Vector  Market is a payoff vector Exchange dollars.

1/19 Motivation Framework Data Regressions Portfolio Sorts Conclusion Option Returns and Individual Stock Volatility Jie Cao, Chinese University of Hong.

Bank Valuation Outline –Determining the value of the equity of a commercial bank –Using the price-earnings ratio –Bank merger and acquisition pricing –Bank.

The Cost of Capital, Corporation Finance and the Theory of Investment By Franco Modigliani and Merton H. Miller David Dodge.

The Real Effect of the Initial Enforcement of Insider Trading Laws Discussed by Ju-Fang Yen Department of Finance, National Taiwan University 7 December.

The evolution of capital structure and operating performance after LBOs: Evidence from US tax returns Cohn, Mills, and Towery UBC Winter Conference, 2011.

CHAPTER 19 INVESTMENT BANKING.

Mehmet ÇELİK Selçuk ÜNALAN H. Onur ÇELİK Ramazan POYRAZ

Discussing “Idiosyncratic risk and long- run stock performance following seasoned equity offerings” Authors: Po-Hsin Ho, Chia-Wei Huang, Chih-Yung Lin,

© Prentice Hall, Chapter 10 Establishing Required Rates of Return Shapiro and Balbirer: Modern Corporate Finance: A Multidisciplinary Approach to.

M&A Mid-Market: What After The Credit Crunch? November th M&A Mid-Market Forum, Paris David Bernard Vice-President, Investment Banking & Private.

CORPORATE FINANCE REVIEW FOR FIRST QUIZ Aswath Damodaran.

Corporate Finance – Prof. BollazziCattaneo University - LIUC Lesson 6 THE OPTIMAL CAPITAL STRUCTURE (cont’d). THE USE OF LEVERAGE - LBOs.

Definition The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing.

Securities Operations

VALUATION OF FIRMS IN MERGERS AND ACQUISITIONS OKAN BAYRAK.

© The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw Hill Topics Covered  After Tax WACC  Tricks of the Trade  Capital Structure and WACC  Adjusted.

Managerial Economics-Charles W. Upton Takeover Bids.

Chapter 7: Bond Markets.

Pop quiz 3 Results Kristian Krnić 1bpBožidar Klarin-Petrina 1bp MacKenzie Moore 1bp Ema Gorup 2pb Dan Stričević 1bp Zvonimir Medvidović 1bp Martin Obad.

Prof. Ian Giddy New York University Structuring LBO Financing.

The standard view of CG (“The Shareholder Value Model”): Deals with the ways in which suppliers of finance to corporations assure themselves of getting.

Pairs-Trading (CH9) Risk Arbitrage Mechanics. Definition of Risk Arbitrage Risk arbitrage in its general connotation relates to trading around corporate.

MERGERS AND ACQUISITIONS Chapter 23.

INVESTMENT BANKING LESSON 5 LEVERAGED BUYOUTS (LBO’s): How IB is Used in Leveraged Buyouts Investment Banking (2 nd edition) Beijing Language and Culture.

Chapter 14: Investing in Stocks and Bonds

SECURITIES FIRMS FINANCIAL INSTITUTIONS & SERVICES.

Chapter The Stock Market McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. 5.

Finance Society Valuation Fundamentals. Different Methodologies Trading Comparables Transaction Comparables Discounted Cash Flow (DCF) Leveraged Buyout.

1. Value:  Low P/E Ratio  Low MV/BV Ratio  Low Price-to-Sales Ratio  High Dividend Yield  Price is “cheap” by some measure of comparison 2.

Risk, Return, and Capital Budgeting (Chapter 12) Financial Policy and Planning (MB 29)

The McGraw-Hill Companies, Inc., 2000

Information Trading: Public Information – Other than Earnings Aswath Damodaran.

ČSOB Acquisition Finance Československá obchodní banka, a. s. Prague, Kampa, March 3, 2008.

Differences in Acquirer Motivations, Announcement Effects, Target Characteristics, and Financing in Private versus Public Acquisitions: The Case of REITs.

1 Finance 7311 Market for Corporate Control. 2 Terminology Target – Potential takeover candidate Acquirer (Bidder) – Firm doing the ‘taking over’ Merger.

1 Financial Crisis and Corporate Cash Holdings: Evidence from East Asian Firms Discussant I-Ju Chen, Yuan Ze University, Taiwan The NTU International Conference.

Tranching and Rating Brennan, Hein, and Poon Comments by Mark Flannery Financial Innovations and Crises, May 11-13, 2009.

Mergers & Acquisitions. Financing capital: discuss opportunities & threats government subsidies bank loans issuing bonds issuing shares  acquisitions:

Leverage Buyouts Arzac, Chapter 13.

Chapter 14: Investing in Stocks and Bonds. Objectives Describe stocks and bonds and how they are used by corporations and investors. Define everyday terms.

1 Complete Markets. 2 Definitions Event State of the world State Contingent Claim (State Claim)  Payoff Vector  Market is a payoff vector Exchange dollars.

Boundless Lecture Slides Free to share, print, make copies and changes. Get yours at Available on the Boundless Teaching Platform.

Management & Leveraged Buyouts

CORPORATE ADVISORY SERVICES. CORPORATE RESTRUCTURING  Revising the organizational structure  Rearrangement and negotiation of organizational functions.

CH.11 MERGERS AND ACQUISITIONS

In the News : : Rogers Microcell Deal Team Fusion.

8- 1 Outline The Market for Corporate Control 8.2 Sensible Motives for Mergers 8.3 Dubious Reasons for Mergers 8.4 Evaluating Mergers 8.5 Merger.

Board Incentive, Director Experience, and Outcomes of Joint Venture Investment Jung-Ho Lai National Taipei College of Business I-Ju Chen Yuan-Ze University.

Private Equity.

Discussion of Masulis-Swan-Tobiansky: Do Wealth Creating Mergers and Acquisitions Really Hurt Acquirer Shareholders? Wuhan, July 2011 Moqi Xu INSEAD/LSE.

How to Do Research in Finance By Cheng-few Lee Chair Professor and Director of the Graduate Institute of Finance, National Chiao Tung University Distinguished.

CONFIDENTIAL Music Publishing Overview August 2010.

1 Takeovers Plan of two lectures: Basic facts Transfers of corporate control and ex-post allocational efficiency Do efficient transfers always occur? Can.

Profitability and Characteristics of Risk Arbitrage : Evidences from Leveraged Buyouts in the U.S. Professors: Sue-Fung Wang Keh-Luh Wan Student: Chiu-Nan.

Dell is Going Private Case Study 1. 2 Why DELL going private?  Major reasons  Autonomy  Leadership  Strategy  Customers  Shareholders  ….. 3.

Corporate Governance and Financial Reporting Research Discussion of “Fraud type and auditor litigation: An analysis of SEC accounting and auditing enforcement.

Where M & A pays and. where it strays

Quick Guide to Treasury

FIN 592 Education for Service-- snaptutorial.com.

FIN 592Competitive Success/tutorialrank.com

FIN 592 Education for Service-- tutorialrank.com.

FIN 592 Teaching Effectively-- snaptutorial.com

VALUATION OF FIRMS IN MERGERS AND ACQUISITIONS

التسعير الفصل الرابع عشر.

Do Stock Mergers Create Value for Acquirers?

Presentation transcript:

Profitability and Characteristics of Risk Arbitrage: Evidences from Leveraged Buyouts in the U.S. Sue Fung Wang, Kehluh Wang, Chiu Nan Tsai National Chiao Tung University Discussed by Keng-Yu Ho National Taiwan University December 11-12, 2008 NTU International Conference on Finance

Risk Arbitrage of LBOs2008 NTU International Conference on Finance 2 Summary of the Paper The determinants of risk arbitrage profit, specifically spread returns. U.S. LBOs from , with 234 successful deals and 65 failed deals. Annual average risk arbitrage return of 20%. Spread return is positively related to offer duration and bid premium but negatively related to price revision. Reversal of target firm price is positively related to P/B ratio.

Risk Arbitrage of LBOs2008 NTU International Conference on Finance 3 Review Comments What makes LBOs special? –Private transaction. –Cash offer. –Less hostile. –Higher rate of success. Compare LBO results to general M&A results. Motivation could be more focused. The definition of revision return… –Based on the example, would it be plus or minus 10%?

Risk Arbitrage of LBOs2008 NTU International Conference on Finance 4 Review Comments More control variables in the model. Sub-sample analysis. –Before and after Further extension… –Corporate governance.