Contributions in Merlin

The purpose of this thesis is to analyze the effect of the announcement of corporate illegalities on the stock prices of Russian non-financial companies in the short term and the long term. The short term results show that here is no effect on the stock prices regardless of the company's sector, type of crime or repeatedness of the illegality. However, the timing of the allegations is found to be important: crimes announced during the dimes of crisis in the economy yield a significant negative effect. In the long term no effect is found, regardless of the timeframe after the announcement.

Calculating the cost of capital is important for companies worldwide. In practice, these capital costs are calculated using the Capital Asset Pricing Model (CAPM) as well as a raw beta estimator is used often. Unfortunately, that it has been shown that the beta is not stable over time. Therefore, the future beta should be adjusted or calculated in another way.

he long-run underperformance of initial public off erings (IPOs) is a well-documented phenomenon. This st udy reviews the theories and provides evidence for up to a three-year aftermarket period from a sample of 67 stoc k issues at the SIX Swiss Exchange between 2000 and 2015. The analysis of the anomaly is based on several alternative approaches. Applying event-time returns, it was found that investors on average realise an abnormal return of up to -26.66%. Calendar-time portfolio returns confirm underperformance. Significance, however, highly depends on the methodology, which counters a distinct IPO effect. Various multiple regression models provide some explanations for the return behaviour. Firm size and the new economy sector exert a negative impact, while firm age and underwriter reputation indicate a positive influence. The outcomes partly support the uncertainty and divergence of opinion hypothesis.

Due to globalization the amount of cross-border transactions and foreign direct invest-ments (FDIs) has recently increased significantly. FDIs are put at different political and economic risks such as discrimination and expropriation by the host states of their for-eign investments. This recently led to several developments trying to mitigate such risks for foreign investors by strengthening investor protection on the domestic and interna-tional level, inter alia by Bilateral Investment Treaties (BITs). BITs are mostly negotiated between a developed, capital-exporting, and a developing, capital-importing, country. They have the aim to protect foreign investors and their investments from discrimination, uncompensated expropriation, and arbitrariness. Therefore, most BITs cover a broad range of investments including movable and immovable properties with any related property rights, various types of interests and participations in companies, joint ventures, claims to money, and intellectual property rights. Further-more, in a lot of BITs also indirectly held and non-controlled investments are covered. BITs establish protection clauses for private investments, as beforementioned, made by natural and juridical persons of one contracting state in the other and provide the foreign investors with the unique investor-state dispute settlement (ISDS) mechanism. This pos-sibility grants investors, whose rights under the BIT have been violated, the right to di-rectly have recourse to international arbitration as dispute party, instead of suing the host state in its own courts. Due to BITs’ broad definitions of investments and investors covered and their wide scope and often relatively openly formulated protection clauses, under BITs investors can bring disputes across a wide range of international, political, and economic areas to arbitration, therefore, also regarding taxation. Recently, an increasing number of taxation-related investment disputes arose, showing that the levy of taxes has become an important issue in international investment arbitra-tion and that various BIT clauses against the discrimination of FDIs can be applied to taxation. Tribunals frequently confirmed the coverage of taxes under BITs, allowing investors to accuse taxation measures directly, as dispute party, via ISDS and sanction-ing host states for BIT breaches due to taxation. The present master thesis questions if and to what extent BITs can interrelate with taxa-tion and whether the governments’ tax sovereignty is restricted by such interactions. As Switzerland, as capital-exporting country, was the first state after Germany to enter into BITs and has currently the world’s third largest network of BITs with 115 BITs in force, the focus is placed on the impacts for Switzerland. Therefore, BITs clauses are studied and up to date research literature regarding BITs and taxation is put together to analyze BITs and the ISDS mechanism as well as their potential interrelations regarding taxation measures. These findings are applied to Switzerland by analyzing the Swiss BIT network and protection scope. Furthermore, tribunal awards are discussed to evalu-ate the interrelations between BITs and taxation in practice and to draw conclusions regarding the possibility that BITs limit host states’ tax sovereignty. It was found that mainly the following BIT standards can cover taxation measures: fair and equitable treatment (FET), national treatment (NT) and most-favored-nation treat-ment (MFN), and expropriation. The FET standard relates to procedural aspects and includes fundamental principles of law such as transparency, legal stability, protection of legitimate expectations, and prohibition of disproportionate and discriminatory measures. Regarding taxation an overlap might mainly arise concerning the guarantee to maintain a stable legal framework, not tolerating certain changes in taxation practice as they violate the investors’ legitimate expectations. The NT and MFN standards require contracting states to not treat investors of the other party less favorably than its own or third-party investors, which are in the same circum-stances. This standard can be applied regarding discriminatory taxation measures such as tax benefits granted only to domestic companies operating within the same circum-stances as foreign investors not receiving the benefits. As the relative protection stand-ards NT and MFN provide a very wide range of protection covering any unequal taxa-tion of investors within a like situation, most BITs include a tax carve-out clause ex-cluding taxation measures from the NT and MFN provisions. Regarding expropriation is was found that the expropriation clause can provide protec-tion, for example regarding excessive and unreasonable taxation significantly destroying the substance of an investment. Concerning arbitration tribunal practice, in very little taxation claims the tribunal con-cluded that the host state violated a BIT clause by its taxation measures. Most disputes included claims regarding different changes of tax laws and practices such as the abol-ishment of value added tax (VAT) refunds, exemptions, and other benefits. Mainly vio-lations of the BIT protection standards FET and expropriation were claimed. Regarding the FET provision, legitimate expectations play an important role. It is often argued that legitimate expectations necessarily vary with the surrounding circumstances and that a foreign investor cannot expect the taxation framework to stay unchanged during the whole time period of its investment. Cases in which changes in tax law were qualified as violations of investors’ expectations were mainly claims concerning changes of taxation granted within special agreements which were made or in force at the time when the investment decision was made. Therefore, the FET standard might, in cases of clearly unexpected and significant taxation changes, have an impact on the tax sovereignty of host states as it provides a huge scope of interpretation and can, depend-ing on the broadness of its interpretation by the tribunal, cover taxation measures and qualify them as breaches of the BIT. The NT and MFN standards are less important regarding limiting tax sovereignty of host states as they do very often exclude taxation measures respectively tax benefits due to different DTTs from their application scope. Furthermore, these provisions overlap with other national and international legislations as well as with the principle of non-discrimination under DTTs and the FET standard under BITs and, therefore, do not lead to further limitations of the tax sovereignty of host states. Nevertheless, if no such other national or international legislations are in force, the NT and MFN standards can have significant impacts on taxation. They provide a very wide scope of application and also include third-countries and not only the two treaty parties. Concerning the analyzation of a possible breach of the NT and MFN clauses, the interpretation of the term “in like situations” seems to be the key factor. If the tribunal uses a broad interpretation, the NT and MFN clause can be breached more easily and, therefore, have an impact on the host state’s tax sovereignty. Regarding expropriation it was found that the tribunals often require a lot of criteria which have to be met to qualify a taxation measure as expropriation. It has, for example, to be unsuitable, excessive or lead to a loss of control or operability of the investment. Furthermore, retroactivity is a criterion for unlawful expropriation. Additionally, the claimant has to prove that the damages and losses the investor suffered directly resulted from the expropriation of its investment. Generally, expropriation can have a huge im-pact on host states’ tax sovereignty as it is included in almost every BIT and as taxation represents a sort of expropriation. Nevertheless, in arbitration tribunal practice taxation measures were hardly ever qualified as expropriation as the tribunal often required a lot of criteria for such a qualification. Therefore, the impact on tax sovereignty of the BIT provision regarding expropriation is limited to very obviously, hardly, and permanently expropriating taxation measures. Some BITs include taxation carve-out clauses. Most of these clauses exclude taxation measures from the protection scope of the NT and MFN standards, very few generally exclude taxation from the whole BIT scope. Tribunal practice shows that such carve-out clauses do not always protect the host state from being judged regarding its taxation and, therefore, from limitations regarding its tax sovereignty. This is mainly the case as most carve-out clauses do not clearly define what qualifies as “tax measures”. Further-more, in many BITs only taxation benefits based on DTTs are excluded from the BIT provisions. In such cases, problems regarding the definition of nationality as well as the question whether indirect taxation measures are excluded by such a formulation might arise. Generally, it can be concluded that taxation measures can fall under the scope of BITs’ protection. Arbitration tribunal practice frequently confirmed this coverage and judged several taxation measures as breaches mainly under BITs’ FET and expropriation claus-es. Even though the beforementioned conclusions were derived from cases without Switzerland involved as dispute party, they are applicable for potential future Swiss disputes, as Swiss BITs include the same protection clauses. Furthermore, it can be ex-pected that within future disputes, tribunals will judge the case and interpret the BIT clauses based on previous awards. Switzerland, as capital-exporting country, tries to protect its investors abroad and, there-fore, uses a wide scope of applicability and broadly formulated protection clauses within its BITs. This increases the risk of limitations regarding the Swiss tax sovereignty by BITs, especially due to the FET standard. The expropriation clause, therefore, represents less risk as, generally, normal taxation practices in well governed countries, such as Switzerland, are very rarely seen as expropriation. Also the standards NT and MFN do not have a huge impact on Swiss taxation as they do in most Swiss BITs exclude taxation measures. Furthermore, a capital-exporting country is not expected to be often involved in BIT disputes as host state, but rather as home state. Therefore, the limitation of Swiss tax sovereignty due to BITs exists but can be expected to be of minor significance.

Of late, China’s outbound M&A activity has experienced significant growth, reaching a record volume of USD 217 billion in 2016. It appears that Chinese enterprises have withstood the financial crisis better than Western companies and, since then, have become major players in the global M&A market. This surge of Chinese cross-border M&As must be explained. It stems from a broad range of factors including, the shift of the Chinese economy from an export-oriented to a more consumption-driven model, the decrease in domestic growth, a favorable financing environment and strong political impulses like the One Belt One Road Initiative. The motivations of Chinese enterprises for the acquisition of foreign assets have been driven by the desire to acquire strategic resources and enter new markets. However, Chinese acquisitions have focused lately on advanced technologies and capabilities to up-grade Chinese industries and serve China’s rising middle-class, which is expected to drive Chinese economic growth in the future. To that extent, Switzerland has been a favorable target nation. Major acquisitions have taken place, including ChemChina’s acquisition of Syngenta (the biggest overseas acquisition of a Chinese company to date) and HNA’s acquisitions of Swissport and gategroup. On top of that, the stability of Switzerland’s institutions, the safe-haven characteristic of the CHF in times of global macroeconomic and political uncertainties and the Swiss excellence in innovation and research, reflect Chinese motivation to acquire Swiss companies. The results of my event-study, whose methodology assesses the financial impact of unanticipated events on stock prices, indicates that Syngenta’s shareholders benefitted from the ChemChina’s public tender offer. Abnormal returns hit 5.20% at the effective announcement date of the merger [t=0] and exceeded 15% during my entire event window of 40 days prior and after the announcement [t=-40; t=+40]. However, since Monsanto’s unsolicited tender offer in April 2015, Syngenta’s stock prices already incorporated information of a potential acquisition. Therefore, the results of the event study do not reflect the entire effect of the acquisition as it was not fully unanticipated. With respect to the bidders, no strong conclusion can be inferred from the CAR analysis of ChemChina and HNA. In brief, my thesis first focuses on the explanation of the key drivers of the recent surge of Chinese outbound M&As, which I define as the Chinese 2015-2016 M&A wave. To do that I start with an analysis of the financial theories driving M&As and the theoretical explanations for M&A waves in the first part of my paper. Also, I present some specificities of Chinese listed companies and stock markets, such as the proportion of government ownership – whose motivations differ from minority shareholders. The second part of the thesis introduces the event-study methodology and interprets the quantitative regression results of the recent big Chinese takeovers in Switzerland.

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This paper investigates how achievement of university peers affects men’s and women’s course choices, major choices, and labor market outcomes. Exploiting random assignment of students to sections, we find that higher-achieving male peers cause men to take more mathematical courses. This effect persists in the labor market where men end up in higher-paying jobs. Women with higher- achieving male peers choose fewer mathematical courses and majors. These women end up in jobs where they earn less but are more satisfied. Thus, it is not obvious whether women’s exposure to high-achieving male peers benefits or harms them.

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