Research

Dr. Julie Wu, assistant professor of finance, investigates the function of acquirer shareholder voting during mergers and acquisitions. This study shows acquirers with low institutional ownership, high deal risk and high agency costs are more likely to bypass shareholder voting, leading to lower announcement returns and higher offers. To avoid shareholder voting, acquirers increase equity issuance and cut payout in the year before the merger. Wu and her co-authors also document a positive causal effect of shareholder voting concentrated among acquirers with higher institutional ownership. The authors conclude institutional monitoring adds value and mitigates agency issues in mergers and acquisitions.

Using survey data, Dr. Laura Poppo, professor of management and Donald and Shirley Clifton Chair in Leadership, and her co-author demonstrate the necessity of both, as contracts create transparency and formalize expectations and processes. Yet, because contracts are incomplete, trust and norms such as sharing information and a collaborative working relationship are imperative.