This article explores Japanese transactional lawyers’ attempts to transplant American legal practice concerning corporate acquisition contracts into Japan. Despite their extensive efforts to disseminate legal concepts originating from the common law into the Japanese legal community, their transplantation attempts produced somewhat unexpected results by the promoters of the transplant. Faced with unfamiliar drafting styles and legal concepts, Japanese courts interpreted American-style corporate acquisition contracts in accordance with traditional Japanese-style contract interpretation. As a result, attempts by Japanese practitioners at transplantation were incomplete. This incompleteness is attributable to their inattention to the differences in approaches to contract interpretation between Japanese and New York courts. New York's approach is much more formalistic and literal than Japan's. If fully aware, however, they could have filled the gap by using functional substitutes for American techniques of controlling adjudicators’ contract interpretation which would effectively operate under Japanese law. Japan's experience confirms that a widely supported view in comparative law scholarship that transplanted law does not necessarily operate in the recipient jurisdiction as it did in its host jurisdiction is applicable to the transplantation of contract drafting practices.

Leuven's Den Hoorn brewery, now AB Inbev SA, has become the world's largest brewing group by far, but critics say the company overpaid for its acquisitions. In this article, we study typical stock market reactions to the many takeover announcements by AB Inbev and the industry's runner-up, Heineken. Unlike Heineken's, the market leader's takeover announcements were met by, on average, a –2% price reaction in the stock market in the announcement month, but most of that is already undone in the next month. For Heineken, the same pattern shows up, only faster: the V-shaped reaction takes a few weeks rather than a few months. Such V-reactions may actually reflect a temporary rise in uncertainty rather than overpaying. The finding that reactions are reversed and heterogeneous across firms, raises issues of interpretation and optimal test design of event studies. (JEL Classifications: G12, G14, G17)

There is a widely held but scarcely challenged belief that most organizational changes fail, especially in mergers and acquisitions (M&A). Failure of M&A is often attributed to factors such as differences in organizational cultures, contested identities, perceived injustice, lack of trust, ineffective leadership and poor communication. A qualitative study was conducted in an acquiring company and two target companies to identify the criteria of a successful change, to explore perceptions of the degree of success of the acquisition(s) they had experienced, and to investigate the factors influencing these perceptions. The findings demonstrated that M&A can be considered successful when attention is paid, not only to integration of practices, but also to socio-cultural factors in managing M&A processes. The overall evaluation of these two acquisitions was that they had been successful. Implications for theory and practice include the possible differences between small- and large-scale M&A experiences.

How do firms protect themselves against infringements of their property rights by their own government? The authors develop a theory based on international law and joint asset ownership with foreign firms. Investment agreements protect the assets of foreign firms but are not available to domestic firms. This segmentation of the property rights environment creates a rationale for international financial relationships between firms. By forming financial relationships with foreign firms, domestic firms gain indirect coverage from the property rights available to foreign firms under investment agreements. If a government is less likely to violate the property rights of covered foreign firms, it is also less likely to violate property rights for assets held jointly by domestic and foreign firms. This article presents systematic evidence from data on the activities of firms in countries that have investment agreements with the United States. International financial relationships between firms, through mergers and acquisitions as well as through bond and equity issues, are more common where property rights are weak. The theory suggests a political logic to the fragmentation of firm-ownership stakes across jurisdictions, offers an institutional explanation of international financial flows, and identifies new distributional consequences of international law.

Mergers and acquisitions (M&A), leveraged finance and capital markets are important markets for professional advisory firms such as investment banks, financial sector law firms and the ‘Big 4’ consultancies. While market totals are widely published in free sources, finding both sub-totals and lists of deals is more difficult and usually requires access to paid-for sources. In this article Ian Hunter considers the best paid-for and free sources and looks at the caveats in relying on them. In essence, he asks ‘why don't the sources agree?’ and provides a ‘jargon buster’ and a critique of sources in M&A, leveraged finance and capital markets.

The first five merger waves were US-led events. In this article we show that the largely over-looked sixth wave (2003–2008) emerged in all regions simultaneously. Because of this, and building upon interconnected literatures – which: (1) suggests that agency is a big predictor of merger performance; (2) distinguishes between three distinct governance traditions; and (3) argues that the Anglo-Saxon system puts the most effort into protecting investors and aligning interests, and the Confucian system the least – we predicted that Anglo-Saxon acquirers would create value in the sixth wave, and Confucian acquirers would destroy it. We find the opposite to be true and show that Chinese acquirers, in particular, created the most value in the sixth wave. In attempting to explain why, we find that China outperformed its Asian neighbors while doing the same thing, and outperformed its Western peers while doing what the literature suggests that they shouldn't do. This not only points to the limits of the generalizability of the existing literature, but supports the suggestion that Chinese acquirers are ‘different’. We call, therefore, for additional research into understanding Chinese and Confucian acquirers using the standard comparative merger data.

Mergers and acquisitions can be a mechanism used by firms to access innovative knowledge, including intellectual property, and to strengthen and expand their core capabilities. In the mergers and acquisition context, the creation of value depends on the transfer of capabilities and knowledge being carried out successfully during the post-acquisition integration process. The paper adopts this view. It examines the role of the top management and personnel who hold knowledge and skills linked to the capability of the acquired firm considered most valuable by the acquiring firm in the transfer of knowledge from the acquired firm to the acquiring firm. The paper also examines whether the impact of the retention of the acquired firm's high-value human resources (HVHR) on knowledge transfer is moderated by the degree of embeddedness of the knowledge to be transferred. Furthermore, the study identifies the factors that influence the retention of the acquired firm's HVHR. We tested the model using data from a sample of 57 domestic, related, friendly Spanish mergers and acquisitions belonging to a wide variety of industries. The results support the notion that the more embedded the knowledge, the greater the impact of the acquired firm's HVHR retention on the knowledge transfer. They also show that the autonomy granted to the acquired firm, the frequency of use of rich media among the personnel of both firms, and the acquired firm's pre-acquisition profitability are factors encouraging the acquired firm's HVHR to remain. The study contributes to the literature on knowledge transfer in mergers and acquisitions by highlighting the relevance of retention of the acquired firm's HVHR for knowledge transfer, as well as demonstrating the importance of taking into consideration the nature of the knowledge to be transferred. It also contributes to the literature on the implementation process in mergers and acquisitions by identifying factors available to managers to favor HVHR continuity in the acquiring firm or the one resulting from the merger.

The paper firstly examines the way in which U.K. mutuals operate and the forces which are leading mutuals to consider demutualisation. Demutualisation is normally accomplished by a Scheme of Transfer under Section 49 of the Insurance Companies Act 1982. The role of the directors and actuaries is discussed, including the impact of the Institute's latest Guidance Note (GN15).

The protection of policyholders' reasonable expectations, the value of membership rights and the basis of dealing with any orphan surplus are the central problems. The paper examines them in the context of both the open fund and closed fund situation and shows how they may be resolved.

A simple model is used to project the financial position of both an open and closed fund in a demutualised company. The relative advantages and disadvantages of each indicate that different courses of action may be appropriate for mutuals in differing financial positions.

The actuary's expertise in the field of life insurance lies mainly in the application of mathematical and statistical techniques to the wide range of issues associated with life insurance business. In particular, the actuary has developed very sophisticated tools for modelling and forecasting and to help in establishing equity between policyholders. In recent years, owners of such businesses, be they policyholders or shareholders, have been coming to depend increasingly upon the actuary's skills to establish value for their overall business. On an ongoing basis, these requirements relate to such things as the need for more complete balance sheet presentation in the case of a proprietary company. Additionally, and inevitably, the actuary is drawn into the world of financial dealing in respect of takeovers and mergers where he is becoming exposed to the commercial risks inherent in being an ‘expert’. The stakes are increasing and in the larger cases hundreds and even thousands of millions of pounds are involved. In this world, the actuary can expect to be subject to a range of pressures from clients, media, takeover rules and so on, all of which are well removed from the actuary's traditional comfort zone. As the stakes increase, so does the threat of litigation.

The authors have recently been involved, one as principal and one as actuarial adviser, in the largest hostile takeover in the life insurance industry in the U.K. and, in the process, many issues of significance to the individual and the profession as a whole were exposed. This paper is intended to address this very important area and to flag some areas which could prove to be of increasing concern to the individual and to point to some where the Institute may wish to become involved.

The paper presents a theoretical framework for the valuation of a general insurance company to actuaries, but also aims to provide reference work for non-actuarial users of appraised values. It distinguishes between the price that may be paid for an insurance operation from what may be called the economic or appraised value. The paper describes the elements of the appraised value calculation, selection of parameters, the uses of such evaluations and explores the future development into explicit stochastic modelling rather than the implicit methodology. Theoretical and practical considerations are illustrated and example valuations of a single line insurer are given.