NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Marcus Opp

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Working Papers

July 2013Regulatory reform and risk-taking: replacing ratings
with Bo Becker: w19257
We analyze a reform of insurance companies’ capital requirements for mortgage-backed securities. First, credit ratings were replaced as inputs to capital regulation. Second, the redesigned system ensures capital buffers sufficient to withstand expected losses, but insufficient to protect against adverse outcomes. Many bonds are now treated as riskless and require minimal capital. By 2012, aggregate capital requirements for mortgage-backed securities have been reduced from $19.36bn (had the previous system been maintained) to $3.73bn. Exploiting that the change did not affect other asset classes, we document that insurers’ risk taking was distorted and increased in response to the new regulation.
July 2012Cash is King - Revaluation of Targets after Merger Bids
with Ulrike Malmendier, Farzad Saidi: w18211
We provide evidence that a significant fraction of the returns to merger announcements reflects target revaluation rather than the causal effect of the merger. In a sample of unsuccessful merger bids from 1980 to 2008, targets of cash offers are revalued by +15% after deal failure, whereas stock targets revert to their pre-announcement levels. This result holds for the subsample where deal failure is exogenous to the target's stand-alone value. We also show that cash bidders revert to their pre-announcement levels, while stock bidders fall below. The results suggest that cash bids signal target undervaluation and stock bids indicate acquirer overvaluation.

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

 
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