Conference Agenda

Using a comprehensive dataset of European-target M&A transactions, we examine how target firms’ financial constraints influence the use and design of earnout contracts. Deals involving financially constrained targets are more likely to include earnouts and exhibit larger deferred payments, consistent with a bargaining power explanation. Alongside bidder constraints, target constraints are a key determinant of earnout adoption and structure. Earnout targets receive higher takeover premium, especially when bidders are also constrained, indicating compensation for greater risk. Although higher premium reduce bidder gains, this e!ect weakens when the premium is instrumented by target financial constraints, alleviating overpayment concerns. Therefore, earnouts facilitate financing and signaling.

This study examines the impact of acquiring firms’ environmental, social, and governance (ESG) performance on post-acquisition bankruptcy risk. Drawing on a large international sample of 8,470 mergers and acquisitions from 76 countries between January 2001 and October 2025, we assess whether higher levels of ESG adoption reduce bankruptcy risk, using the Altman Z-score to measure post-acquisition financial distress. Our analysis considers both aggregate ESG performance and its individual components to assess their differential impact on bankruptcy risk. The results provide robust evidence that higher ESG performance is associated with lower post-acquisition bankruptcy risk, with the governance dimension exhibiting the strongest influence. These findings highlight ESG practices as an additional strategic capability that supports effective integration, mitigates operational and reputational risks, and reduces financial distress in the post-merger period. The study contributes to the literature by offering the first large-scale international evidence linking ESG adoption to post-acquisition bankruptcy risk and provides important implications for corporate managers, investors, and policymakers seeking to enhance corporate sustainability and risk management.

This paper investigates whether shareholder activism disciplines the credibility of corporate

ESG commitments or, alternatively, extracts operational value from firms with weak sustainabil-

ity practices. Drawing on a US panel of firm-year observations spanning 1996–2024, we find that

activism does not significantly affect backwards-looking ESG ratings but meaningfully reduces

ESG aspirations rank — a forward-looking measure of the gap between sustainability claims and

operational reality (Bams & Kroft, 2024). This suggests activists compress the talk–walk gap

rather than improving underlying sustainability performance. Critically, the effect is durable:

aspiration credibility continues to deepen two to three years after activist exit, indicating that

activism initiates lasting governance reforms rather than theatrical compliance.

Disaggregating by ESG commitment reveals two opposing mechanisms, which we formalise

as the Monitoring–Harvesting Framework. In high-ESG firms, activism reduces accrual-

based earnings management, consistent with strengthened governance raising the cost of report-

ing discretion. In low-ESG firms, activism elevates abnormal operating cash flows, consistent

with short-term value extraction. The walk–talk gap thus serves as the identifying boundary

between these two regimes. Three additional findings refine this picture. First, governance-

focused campaigns prove more effective at enforcing ESG credibility than specialist ESG cam-

paigns, as they target the institutional structures underlying sustainability claims rather than

the claims themselves. Second, cooperative low-escalation engagements discipline aspirations

far more effectively than confrontational proxy campaigns, which trigger defensive ESG over-

claiming by management; the coercive model of activism is inverted for ESG outcomes. Third,

persistent activists who re-engage with the same firm generate ESG aspiration discipline 4.5

times larger than first-time activists, and a horse-race specification confirms that hedge fund

activists independently worsen ESG credibility while gadfly activists improve it. Results are

robust to propensity score matching, Heckman selection correction, and IV/2SLS estimation

using industry-level activism waves as an instrument.

We examine whether public firms’ debt choice is sensitive to private firm disclosure transparency. Analyzing data from 60 countries between 2002 and 2021, we find that private firm transparency significantly reduces public firms’ reliance on bank debt. This evidence implies that private firm disclosure transparency narrows information asymmetry, which, in turn, reduces public firms’ reliance on bank debt. We also document that private firm disclosure transparency is negatively associated with bank monitoring needs, evident in the lower shares taken by lead arrangers and the lower probability of having debt covenants. Cross-sectional results suggest that the impact of private firm transparency is larger when public firms suffer worse information opacity, public firms have lower bank monitoring needs, private firm disclosures are more important to their public peers, and bond markets are more developed. In relying on the staggered implementation of electronic business registers as a plausibly exogenous shock and a simulated disclosure scope as the instrumental variable, we continue to find that private firm disclosures reduce public firms’ bank debt reliance, helping to sharpen identification by alleviating endogeneity threats. Collectively, we provide empirical support for private firm transparency engendering a positive externality that shapes public firms’ debt choice.