FIRN Virtual Seminar Series - Stefan Schantl, University of Melbourne

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Working with the large FIRN member institutions we have developed a virtual seminar series where all FIRN members can participate. The se

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Working with the large FIRN member institutions we have developed a virtual seminar series where all FIRN members can participate.  The seminars will be via zoom and will be about an hour long, comprising presentation followed by moderated Q&A.   

In collaboration with the University of Melbourne, FIRN  invites you to a virtual seminar presented by Stefan Schantl, University of Melbourne.

Title:  Mergers, Materiality, and Adverse Selection: Evidence on the Economic Consequences of IBP v. Tyson

Stefan F. Schantl (University of Melbourne), Christopher R. Stewart (University of Chicago)

Abstract:  The landmark court ruling of IBP v. Tyson in New York in 2001 and its affirmation by the Hexion v. Huntsman ruling under Delaware law in 2007 led to a clarification of the scope of material adverse event provisions, which allow acquirers to terminate deals based on adverse events impacting target firms’ economic substance. Using a sample of mergers with large public targets between 1997 and 2018, we study the economic consequences of these rulings. We provide evidence consistent with the argument that the rulings tightened materiality standards and weakened acquirers’ ability to renegotiate and terminate mergers. Ex ante acquirers price protect more, leading them to improve contract completeness to reallocate deal risk. Adverse selection nevertheless worsens, resulting in a truncation of merger activity along the dimensions of target size, risk, and quality.

Moderated by Zhuo Zhong, University of Melbourne

All FIRN members are welcome to this event. 

Please register your interest and you will be sent an email the day before the seminar with the zoom meeting details.

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