David Offenberg is an associate professor of finance at Loyola Marymount University who is amongst the world’s leading academic experts in entertainment finance. His research has appeared in the Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Journal of Corporate Finance, and Financial Management. Dr. Offenberg teaches innovative courses in theoretical and applied corporate finance, including MBA and undergraduate-level courses in entertainment finance. He organizes the LMU Entertainment Finance Alumni Network and founded the annual California Corporate Finance Conference (hosted by LMU). He is also a recipient of numerous teaching and research awards. Prior to joining the faculty, Dr. Offenberg was a 401(k) research analyst for Watson Wyatt and Co. He received a Ph.D. in finance and a B.S. in industrial management from Purdue University.
Purdue University: Ph.D., Finance 2005
Purdue University: B.S., Industrial Management 1996
Areas of Expertise (5)
Mergers and Acquisitions
Tender offers provide the advantage of substantially faster completion times than mergers. However, a tender offer signals to the target higher demand for its shares and raises its reservation price. In equilibrium, bidders tradeoff speed and cost. Consistent with this theory, we show that deals in more competitive environments and deals with fewer external impediments on execution are more likely to be structured as tender offers. Tender offers also require higher premiums than mergers. Finally, the rivals of the bidding firm realize significantly lower announcement returns and subsequent operating performance in tender offers than in mergers.
Most extant studies consider golden parachutes as the totality of change-in-control payments. However, for the median CEO of firms listed in the S&P SmallCap 600 index in 2009, golden parachute payments are only 46% of total change-in-control compensation. We measure total change-in-control payments using newly available data for this sample. Our results show that the total payments to the departing CEO are estimated at 1.1% of market value (on average). We also show that newly earned compensation (as opposed to accelerated vesting of lagged incentive pay) makes up approximately half of total change-in-control payments for the median CEO, and these two components of severance pay are positively correlated (contrary to existing theory). Furthermore, change-in-control payments do not appear to impede takeover offers or affect takeover premiums. Total change-in-control payments are small on average, and boards seem to take care in negotiating these terms with incumbent CEOs so that change-in-control payments do not adversely affect the firm's prospects in the takeover market.