Emma Black

This paper examines whether foreign acquisitions of Chinese firms improve share-price performance relative to domestic acquisitions. The results show that foreign acquisitions are not associated with positive abnormal returns in the short-run, as is the case for domestic acquisitions, but do realize significant long-run gains especially when the acquiring firm is large. Specifically, we find that there is a significantly positive long-run over-performance of 29.81% for large foreign acquisitions benchmarked against domestic ones while large foreign acquisitions earn 22.39% at the aggregate. Our evidence suggests that large Chinese acquirers gain when they expand their operations abroad, consistent with the view of reverse internalization.

This paper examines the value creation from Merger and Acquisition (M&A) activity in the UK market using a sample of deals that complete and do not complete, stratifying the analysis for both firm-level and market-wide misvaluation. Driven by behavioural psychological research into the impact of M&As upon bidder returns, we find that bidders that do not reach completion statistically outperform those that do in the three-years post-announcement and post-outcome. After controlling for firm-valuation, undervalued bidders enjoy superior returns benefitting from upward revaluations irrespective of deal outcome. We also find that the quality of successful mergers is improved in low-value markets, and propose that this is most likely due to a more careful strategy being adopted to avoid negative stock price punishment.

This paper examines the impact of sudden changes in investor mood on stock market reactions. Driven by behavioural psychological findings that indicate a strong relationship between sporting outcomes and mood, we propose Formula One grand prix results as a new mood variable. We find significant superior abnormal returns for sponsors of race winning teams, and for teams that place one or both of their cars in a top-three podium position, relative to those that do not. Sponsors of race-winning teams earn abnormal returns 0.32% higher than race-losing teams, while sponsors of top-three podium finishers earn abnormal returns 0.20% higher. This effect can be explained using the investor recognition hypothesis, as well as potentially representing a rational upward repricing of the value of the sponsor’s marketing contract following a sporting win.

Behavioural finance models suggest that under uncertainty, investors overweight their private information and overreact to public signals. We test this prediction in a M&A’s framework. We find that under high information uncertainty, when investors are more likely to possess firm-specific information, they generate highly positive and significant gains following the announcement of private stock, public cash and private cash acquisitions (positive news) while the market heavily punishes public stock (negative news) deals. On the other hand, under conditions of low information uncertainty when investors do not possess private information, the market reaction is complete (i.e. zero abnormal returns) irrespective of the type of acquisition.

This paper examines the financial effect of the announcement to host the 2012Olympic Games on the stock market of the awarded (London, UK) and the rejectedcities (Paris, France). Moreover, we examine the announcement effect of theOlympic sponsorship announcement on the share value of the thirteen London 2012Tier 1 and Tier 2 official sponsoring firms that form the London 2012 OlympicPartners and Olympic Supporters. Through an event study analysis, we find asignificant positive effect on the general market index of the host city (London, UK)with an increase of, approximately, +1.34%. Furthermore, we find that the Olympicselection announcement created no significant effect on the stock market of therejected city (Paris, France). As for the sponsoring firms, we find contrastingevidence. While some argue that sponsoring the Olympic Games is of value for thesponsoring firm and its shareholders, others note that the announcement of Olympicsponsorship either fails to exert any impact or indeed negatively impacts the value of the firm. We find that the Olympic sponsorship official announcement creates asignificant positive impact on the share price of three Tier 1 sponsoring firms -specifically Adidas, BT and Lloyds TSB - and Tier 2 sponsoring firms- specifically Adecco and Cisco- while we find evidence of significant negative effects on the valueof four Tier 1 sponsoring firms (BMW, BP, British Airways and EDF), as well as onthe value Tier 2 sponsors ArcelorMittal, Cadbury, Thomas Cook and UPS.

This study primarily aims to investigate the movement of the British Stock Market, represented by the FTSE All Share Index, against the background of which political party rises to power, which throughout our sample has been dominated by two major parties - Conservative and Labour. Consistent with previous research concerning short-term stock price movements, we find that political events, as proxied using general elections, do affect stock market movements. The distinct positive return pattern after the announcement of a Conservative victory supports the anecdotal evidence that the market prefers Tory governments on an economical level. In addition, we find weak statistical evidence that the market decreases after the announcement of Labour victories. However, utilizing an event study, we find that these stock movements do not generate significant abnormal returns. Analysing the long-term stock price movements, we find by simple return comparison an economically significant positive performance difference in favour of Conservative governmental terms. Interestingly, this return pattern exists although the variance is higher during Labour governmental terms. However, after controlling for business fluctuations, we find no statistical evidence that links this performance superiority to the Conservative party. Furthermore, we do not find a statistically significant performance difference between the first and the second governmental term.

With the rise of China’s global presence, mergers conducted by domestic bidders have begun to raise political and economic concern. This paper directly examines this topical debate by comparatively assessing the performance of inexperienced Chinese bidders undertaking mergers against the experienced merger market of the US. The work shows that US bidders follow a market timing strategy while Chinese bidders have sought to capitalise upon deals conducted in low valuation markets, most likely to signal that target firms are also in a low-valuation state. This value strategy is reaping great rewards for Chinese firms and overall, Chinese bidders significantly and positively outperform those in the US. With this evidence, it is apparent that experience does not always make the difference.

The New Brazil has emerged onto the world stage after a decade under a democratic regime of political and economic stability. Growth and development, boosted by Chinese FDI, has accompanied a commodity boom sourced from the richness of the country’s natural resources. Historically inward-looking, Brazil has gradually projected itself internationally both politically, taking its first seat at the 2002 G8 conference, and economically, surpassing the UK in 2012 to become the world’s fifth largest economy. This ascension has been expressed no more so than in the national love, Futebol. Capital inflows and large sponsorships have allowed for Brazil to begin retaining the footballing talent it has historically exported. The strength of the Brazilian Real coupled with the global economic crises engulfing Europe, tightening the purse strings of Italian and Spanish clubs, has motivated talented players to re-migrate home, while foreigners have also been enamoured by newfound opportunities, making the Brazilian League a regional power. With Brazil set to host the 2014 World Cup and the 2016 Olympics, sport now offers a real tangible benefit, both economically and socially. This paper will discuss the sustainability of economic development by means of sport, combining sociological and financial frameworks. Related literature reports that hosting mega-sporting events can either boost economic development, or ignite financial turmoil due to over-investment. The Brazilian Real – central to the reversal of fortunes – has begun to weaken, with the economy falling below the UK to seventh place. Amid such volatility, the sustainability of this story remains uncertain, and thus central to both sociological and economical analyses presented in this paper.

This paper proposes Formula One grand prix performance as a new variable to examine the power of sports sentiment on asset prices. The three primary research questions in this paper focus on the ability of successful Formula One grand prix performance to stimulate investor demand for the stock of Formula One race team sponsors. Both univariate and multivariate analysis highlights grand prix performance as a significant driver of race team sponsor share price. This study reveals that sponsors of race winning teams, and teams which place one or both of their cars in the top three finishing positions experience superior short-run stock performance than those of other participating teams over the race event window. The argument presented is in line with the asset pricing model proposed by Merton (1987) and the empirical results allow an opportunity to provide practical advice for firms considering a Formula One sponsorship marketing strategy.

Formula One attracts one of the largest worldwide audiences with some 600 million viewers annually. Associated with glamour and prestige, many corporations have sought to secure links with race teams and grand prix. Of late, Qatar has begun steps to establish F1 infrastructure with the intention of hosting grand prix as part of Qatar's National Vision 2030. So, why is Qatar now focussing on F1 and is this a good investment for the country? This project aims to combine qualitative and quantitative methodologies to delve deeper into this growing area.

The New Brazil has emerged onto the world stage after a decade under a democratic regime of political and economic stability. Growth and development, boosted by Chinese FDI, has accompanied a commodity boom sourced from the richness of the country’s natural resources. Historically inward-looking, Brazil has gradually projected itself internationally both politically, taking its first seat at the 2002 G8 conference, and economically, surpassing the UK in 2012 to become the world’s fifth largest economy. This ascension has been expressed no more so than in the national love, Futebol. Capital inflows and large sponsorships have allowed for Brazil to begin retaining the footballing talent it has historically exported. The strength of the Brazilian Real coupled with the global economic crises engulfing Europe, tightening the purse strings of Italian and Spanish clubs, has motivated talented players to re-migrate home, while foreigners have also been enamoured by newfound opportunities, making the Brazilian League a regional power. With Brazil set to host the 2014 World Cup and the 2016 Olympics, sport now offers a real tangible benefit, both economically and socially. This paper will discuss the sustainability of economic development by means of sport, combining sociological and financial frameworks. Related literature reports that hosting mega-sporting events can either boost economic development, or ignite financial turmoil due to over-investment. The Brazilian Real – central to the reversal of fortunes – has begun to weaken, with the economy falling below the UK to seventh place. Amid such volatility, the sustainability of this story remains uncertain, and thus central to both sociological and economical analyses presented in this paper.