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• Article | Journal of Accounting Research | March 2020

  The Politics of M&A Antitrust

  Mihir N. Mehta, Suraj Srinivasan and Wanli Zhao

  Antitrust regulators play a critical role in protecting market competition. We examine whether firms can use the political process to opportunistically influence antitrust reviews of corporate merger transactions. We exploit the fact that in some mergers, acquirers and/or targets are connected to powerful U.S. politicians that serve on the two congressional committees with antitrust regulator oversight. We find that merger parties with these connections receive relatively favorable antitrust review outcomes. To establish a causal link, we use plausibly exogenous shocks to firm-politician links and a falsification test. Politician incentives to influence merger antitrust review outcomes appear to be driven by lobbying, contributions, and prior business connections. In sum, our findings suggest that political interference affects the ability of antitrust regulators to provide independent recommendations about the anti-competitive effects of mergers.

  Keywords: political economy; antitrust; FTC; DOJ; Mergers and Acquisitions; Government and Politics; Power and Influence;

  Citation:

  Mehta, Mihir N., Suraj Srinivasan, and Wanli Zhao. "The Politics of M&A Antitrust." Journal of Accounting Research 58, no. 1 (March 2020): 5–53. (Previously circulated under title "Political Influence and Merger Antitrust Reviews.")  View Details

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• Case | HBS Case Collection | January 2020

  Governing PG&E

  Lynn S. Paine and Will Hurwitz

  The five commissioners of the California Public Utilities Commission (CPUC) listened intently at a public forum in April 2019 as PG&E Corporation’s out-going chairman Richard Kelly described the company’s proposed new board. PG&E, which provided electricity and natural gas to millions of Californians, had once been recognized for its vision in foreseeing energy’s potential to reshape the state and power its economy. But PG&E was now in the crosshairs of investors, regulators, and the public for something else entirely: its role in a series of deadly and destructive wildfires that had ravaged the region and precipitated PG&E’s bankruptcy months earlier. Called “the first climate-change bankruptcy,” it was the largest utility bankruptcy in U.S. history. The commissioners at the CPUC, PG&E’s primary regulator, were particularly concerned about PG&E’s governance and had convened the forum to solicit opinions from experts and the public and to hear for themselves what steps the company was taking to improve it. The Commissioners are considering whether to make specific recommendations regarding the board’s composition and functioning, including how the board assesses and compensates PG&E’s CEO. A principal issue is the use of non-financial metrics to evaluate and reward CEO performance.

  Keywords: bankruptcy; board of directors; board dynamics; Business ethics; business model innovation; corporate boards; energy efficiency; environmental and social sustainability; government and business; hedge funds; Institutional investors; legal aspects of business; regulated monopolies; regulation; shareholders; stakeholder management; strategy and execution; utilities; Insolvency and Bankruptcy; Governing and Advisory Boards; Ethics; Capital Structure; Climate Change; Corporate Accountability; Corporate Governance; Environmental Sustainability; Executive Compensation; Leadership; Management; Safety; Business and Government Relations; Energy Industry; Utilities Industry; California; United States;

  Citation:

  Paine, Lynn S., and Will Hurwitz. "Governing PG&E." Harvard Business School Case 320-024, January 2020.  View Details

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• Case | HBS Case Collection | November 2018 (Revised January 2020)

  Tesla, Inc. in 2018

  Siko Sikochi, Suraj Srinivasan and Quinn Pitcher

  On August 7, 2018 Elon Musk, Chairman and CEO of Tesla tweeted that he was considering taking Tesla private and had secured funding. Weeks went by without details about a deal and speculation grew that Musk had misled investors. He soon abandoned the idea, but the Securities and Exchange Commission (SEC) charged him with violating securities laws by either knowingly or recklessly misleading investors. The lawsuit was settled with Musk agreeing to step down as Tesla chairman for three years while remaining as a director on the board and CEO. On November 7, 2018, Tesla announced the appointment of Robyn Denholm as Chair of the Tesla Board. Observers were cautiously optimistic that an independent chairman could ease longstanding governance concerns. Ms. Denholm was regarded as a good choice, but details about her role remained unclear and the jury was still out on her independence from Musk.

  Keywords: disclosure regulation; board independence; Corporate Governance; Business and Shareholder Relations; Governing and Advisory Boards;

  Citation:

  Sikochi, Siko, Suraj Srinivasan, and Quinn Pitcher. "Tesla, Inc. in 2018." Harvard Business School Case 119-013, November 2018. (Revised January 2020.)  View Details

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