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Purpose – The purpose of this paper is to examine the effect of board structure on non-US acquirer returns in 11,499 acquisition transactions from 60 countries during the period from 2001 to 2011. Design/methodology/approach – In this paper the authors employ event study methodology and regression analyses including instrumental variables two-stage least squares regressions. Findings – The authors find that board independence in non-US firms is associated with significantly higher acquirer returns, but this effect is only present in countries with lower levels of investor protection. The authors contribute to the literature by documenting that due to the substitution effect between internal and external governance, when external governance mechanisms are not adequately developed, better internal governance (as measured by higher degree of board independence) reduces agency problems and leads to better firm decisions and outcomes (as measured by the quality of corporate acquisitions). Originality/value – The paper is the first to empirically examine the relation between board independence and acquirer returns in non-US firms. The findings have important implications for both company managers and national policy makers who are debating the costs and benefits associated with increasing the degree of board independence in publicly traded companies around the world.

The paper investigates the link between host country laws restricting the ability of foreign bidders to conduct cross-border mergers and acquisitions (M&As) and the dynamics of domestic and foreign markets for corporate control. The results indicate that, as governments, especially governments of less wealthy, faster growing economies, relax their cross-border M&A laws, foreign bidders increase the number of cross-border M&As. The likelihood that foreign bidders establish cross-border M&As in which they obtain a controlling stake in the target is greater in host countries with less restrictive cross-border M&A laws. In such countries, foreign bidders are also more likely to use cross-border M&As than cross-border joint ventures as the means for entering the market. As host country cross-border M&A laws improve, foreign bidders are increasingly more likely to seek the types of entry modes that provide them with greater control over their investments.

South Korean industrial conglomerates (chaebols) are discussed in the context of value-based management (VBM). Recent economics and finance literature on the diversion of corporate resources from the firm to the controlling shareholders (tunneling), for which chaebols are notoriously known, is discussed. Chaebols have engaged in empire building and expropriation of minority shareholders, distorting the process of efficient resource allocation in South Korea, and became the root cause of the 1997 financial crisis. We argue that the 1997 crisis should be viewed as a consequence of chaebols’ systematic deviation from the guiding principles of VBM. We use tunneling within chaebols as an example of the need to directly address prohibition of the expropriation of minority shareholders as a primary postulate of VBM. We argue that VBM should require that the value generated by the firm not be expropriated from minorities, or any stakeholders, by dominant shareholders. We also examine moral and ethical considerations and present explanations as to why the unethical practice of tunneling has been tolerated by the South Korean public. We show that public opinion on tunneling is changing and that the treatment of minority shareholders by chaebols’ controlling families is becoming increasingly unacceptable to South Koreans.

Joint ventures (JVs) and alliances are important forms of inter-organizational cooperation because they allow firms to achieve complex mutual tasks, otherwise impossible using simple arm's-length contracts, but without actually acquiring one another. In light of the recent trend in globalization, this feature of JVs and alliances is very important to multi-national corporations (MNCs). These firms have complex operations, making simple arm's-length contracts insufficient. However, MNCs are also very large, making mergers and acquisitions and takeovers very expensive. This paper describes a global trend in JVs and alliances for the period 1990 to 2000, utilizing the Thomson Financial SDC Platinum database. We survey the existing theoretical and empirical literature on JVs and alliances, and provide a detailed description of the world of JVs and alliances as depicted by this database. The results reveal a number of interesting facts related to the forms and types of JVs and alliances, their industrial and geographical distributions, and the patterns of ownership.

The predictive power of past returns for January reversal is compared with that of the nearness of current prices to the 52-week high. When compared jointly, past returns lose their forecasting power for January returns and the nearness of current prices to the 52-week high assumes the dominant role in explaining the January reversal. This suggests that tax-loss selling is not the primary factor explaining the January effect. A behavioral explanation consistent with the window-dressing argument is proposed in that the 52-week high acts as an “anchor,” a highly visible reference price to fund holders, increasing fund managers’ incentives to window-dress by temporarily adding (removing) stocks that are perceived by fund holders as good (bad) investments, based on the nearness of these stocks’ current prices to the 52-week high.

We argue that economic value to society is created by converting input resources into valued outputs though the application of technology. To support this argument, the concept of technology leverage is introduced, and it is noted that the same input resource can be converted into different output values depending upon the technology employed in the conversion process and the state of technical innovation at the time the conversion occurs. This implies that through as yet unrealised innovations, future generations may create greater value for the same amount of resource than is currently possible. This difference has significant ramifications for current day resource allocation decisions. In addition to more conventional conservation arguments, technology leverage also recognises that the future value of retaining resources, especially non-renewable ones, may be evaluated using real option valuation techniques. These concepts are helpful in determining more comprehensive policies relating to resource allocation decisions.

Most research on the impact of income and other socioeconomic variables on the environment focuses on specific local environmental effects and not on the broader sustainability picture. We seek to fill the apparent gap in the literature, exploring whether and the extent to which income, economic openness, income inequality and the distribution of power influence sustainability. We employ ecological footprint data and from it derive a sustainability indicator, the ecological deficit. Using econometric analysis, we test the effects of our explanatory variables on the ecological deficit. While we find that economic openness appears to run counter to the goal of sustainability, the results for the other variables are more ambiguous and inconclusive.

We focus on the identification and selection of innovation initiatives that are intended to create cumulative social value. We suggest that a process like discounted cash flow (DCF) is needed, but developing such a process is complicated in the social value context due to a lack of metrics and consistent social value constructs. Taking a dynamical systems perspective and using economic modelling as a guide, we argue that access to resources and information about their future use represent measurable social value. Further, we describe innovation as the recognition and exploitation of patterns in the environment that create social value.

This paper investigates the effect of investor protection, political stability, financial development, trade openness, education and legal openness of foreign direct investment (FDI) regimes on forms and ownership of FDI in host countries. Host countries with stronger investor protection, more political safety and more open rules for foreign investment attract greater FDI inflows. This result holds after controlling for the various forms foreign investors use to enter host countries. These factors are shown to have a positive impact on the number of cross-border mergers and acquisitions (M&As) and joint ventures (JVs) that host countries receive. Patterns of ownership in cross-border M&As reveal that foreign acquirers are less likely to hold outright majority control if the target company is located in a country with less political stability, weaker investor protection and restrictive FDI regimes.