Mergers and Acquisitions: Aktionar Wealth Effects of Domestic, Cross-Border, and Cross-Continental Mergers and Acquisitions

 Mergers and Acquisitions: Aktionar Wealth Effects of Domestic, Cross-Border, and Cross-Continental Mergers and Acquisitions Dissertation

Master Thesis in Fund Mergers and Acquisitions

Shareholder wealth effects of domestic, cross-border, and cross-continental mergers and acquisitions

dua puluh enam November 2009

Abstract

This kind of study studies the differences in short-term aktionar wealth associated with domestic, cross-border and cross-continental mergers and acquisitions (M& As). Dissimilarities between riches effects of domestic and cross-border M& Similar to expected as companies in crossborder M& As deal with differences in the economic environment. Furthermore, larger variations are expected in cross-continental M& As because of larger variations in the economic environment.

In order to review differences in aktionar wealth results an even examine was executed to measure the abnormal comes back of bidders and focuses on around and before the M& A story. Hence, at the announcement the M& A plans become public and the wealth results should be shown in reveal prices. Initially, 637 buyers and 702 targets had been selected out of a sample of 861 M& A announcements. Second, the Total Average Unusual Return (CAAR) was determined to express the wealth results. Last, the CAARs of domestic, cross-border, and cross-continental M& A announcements had been compared.

Pertaining to bidders this study would not found significant differences in wealth effects of home-based, cross-border, and cross-continental M& As. The wealth effect in domestic bids, yet , was slightly higher than cross-continental and cross-border bids, quite possibly due to the complexness of cross-border deals. In contrast, this analyze has found interesting differences pertaining to targets. Within the announcement day targets in cross-continental bargains earned seventeen. 27% unusual returns, whereas targets in domestic and cross-border discounts earned 8. 84% and 9. 14%, respectively. So , targets in cross-border bargains get substantial larger wealth gains than targets in both domestic and cross-border deals. The results might support the theory that goals can create wealth by enhancing their company governance through M& As. The benefits also might reveal that customers tend to spend high payments in cross-continental deals.

Important to note, nevertheless , is that almost all cross-continental discounts targeted US companies, which might have motivated the effects. Future study, therefore , should certainly focus on targets of cross-continental deals outside the US to be able to verify in case the results of the study apply to all cross-continental targets or only to US targets.

you

Table of Contents

Abstract...................................................................................................................................... 1 Stand of Articles....................................................................................................................... 2 1 . 2 . Introduction......................................................................................................................... 3 Literary works Review................................................................................................................ 7 2 . 1 2 . two 2 . several 2 . 5 2 . five 3. Causes........................................................................................................................ 7 Wealth Effects: Buyers and Focuses on........................................................................... 8 Wealth Effects: Home or Cross-Border................................................................. 9 Earnings Driver: Friendly or Hostile.............................................................................. 10 Profit Driver: Ways of Payment............................................................................... eleven

Data and Methodology...................................................................................................... 12 3. you 3. a couple of Sample Variety and Info Sources.......................................................................... doze...

References: Catalogs Ravenscraft, G. J., Sherer, F. Meters. (1987). Mergers, Sell-Offs, and Economic Performance. Washington POWER: The Brookings Institution Sudarsanam, S. (2003). Creating Worth from Mergers and Purchases. London: FT Prentice Area

6. 2

Academic articles or blog posts Barber, B. M., Lyon, J. M. (1997). Discovering long-run abnormal stock earnings: the scientific power of and specifications of test stats. Journal of Financial Economics, 43, 341-372 Becht, M., Bolton, P., Roell, A. (2002). Corporate Governance and Control. In Constantinides, G., Milton, H., Stulz, R. (2003). Handbook in the Economics of Finance. Amsterdam: North Netherlands Berkovitch, Electronic., Narayanan, M. P. (1993). Motives for Takeovers: An Empirical Analysis. The Diary of Financial and Quantitative Examination, 28 (3), 347-362 Brouthers, K. Deb., van Hastenburg, P., truck den Ven, J. (1998). If Many Mergers Are unsuccessful Why Are They a favourite? Long Range Preparing, 31 (3), 347-353 Burkart, M., Panunzi, F. (2006). Takeovers. ECGI - Finance Working Conventional paper, 188 Cebenoyan, A. S., Papaioannou, G. J., Travlos, N. G. (1992). Overseas Takeover Activity in the U. S. and Wealth Results for Goal Firm Investors. Financial Management, 21 (3), 58-68 Chan, K. C., Cheng, L. T. T. (1995). A Comparative Analysis of the Attributes of Foreign Takeovers. Record of Organization Finance & Accounting, twenty two (5), 637-657 Conn, 3rd there’s r. L., Connell, F. (1990). International Mergers: Returns to U. S i9000. and Uk Firms. Journal of Organization Finance & Accounting, seventeen (5), 689-711 Danbolt, L. (2004). Focus on Company Cross-Border Effects in Acquisitions into the UK. Euro Financial Supervision, 10 (1), 83-108 Brownish, D., Ryngaert, M. (1991). The Mode of Acquisition in Takeovers: Taxes and Asymmetric Data. Journal of Finance, 46 (2), 653–669.

30

De Jong, Farrenheit. (2007). Celebration Studies Methodology. Lecture Notes: Scientific Finance and Investment Circumstances Devos, Elizabeth., Kadapakkam, S., Krishnamurthy, H. (2009). How can Mergers Generate Value? An evaluation of Fees, Market Electricity, and Effectiveness Improvements as Explanations intended for Synergies. Review of Financial Research, 22 (3), 1179-1211 Eckbo, B. Elizabeth., Thorburn, K. S. (2000). Gains to Bidder Businesses Revisited: Home-based and International Acquisitions in Canada. Journal of economic and Quantitative Analysis, 35 (1), 1-25 Fama, E. F., Fisher, L., Jensen, M. C. (1969). The adjustment of Stock Prices to Fresh Information. Foreign Economic Assessment, 10 (1), 1-21 Finkelstein, S. (1999). Safe methods to cross the merger minefield. Mastering Global Business: The full MBA Companion in Global Business, 119-123 Firth, M. (1980). Takeovers, Shareholder Comes back, and the Theory of the Firm. The Quarterly Journal of Economics, 94 (2), 235-260 Franks, M. R., Harris, R. T. (1989). Aktionar Wealth Associated with Corporate Takeovers. Journal of Financial Economics, twenty-three, 225-249 Franks, J. L., Harris, L. S., Mayer, C. (1988) Means of Payment in Takeovers: Results to get the United Kingdom as well as the United States. In Auerbach, A. J. (1988). Corporate Takeovers: Causes and Consequences. Chicago: University of Chicago Press Goergen, Meters., Renneboog, L. (2004). Shareholder Wealth Effects of European Domestic and Cross-border Takeover Prices for bids. European Economical Management, 10 (1), 9-45 Gompers, G., Ishii, L., Metrick, A. (2003). Business Governance and Equity Prices. The Quarterly Journal of Economics, 118 (1), 107-155 Gort, M. (1969). A fiscal Disturbance Theory of Mergers. The Quarterly Journal of Economics, 83 (4), 624-642 Gregory, A. (1997). A great examination of the future performance of UK acquiring firms. Journal of Business Finance & Accounting, 24 (7 & 8), 971-1001 Grossman, H. J., Hart, O. M. (1980). Takeover Bids, The Free-Rider Issue, and the Theory of the Company. The Bells Journal of Economics, 10 (1), 42-64 Harris, Ur., Ravenscraft, M. (1991). The role of acquisitions in foreign immediate investment: data from the US stock market. Diary of Financing, 46, 825-844 Holderness, C. G., Sheehan, D. S. (1985). Raiders or Saviors? The Evidence about Six Debatable Investors. Journal of Financial Economics, 14, 555-579 31

Jayaraman, N., Mandelker, G., Shastri, K. (1991). Market Expectation of Merger Activities: An Empirical Check. Managerial and Decision Economics, 12 (6), 439-448 Kang, J. (1993). The intercontinental market to get corporate control: mergers and acquisitions individuals firms simply by Japanese firms. Journal of Financial Economics, 10, 345-371 Kaplan, S. And., Weisbach, Meters. S. (1992). The Success of Acquisitions: Evidence via Divestitures. The Journal of Finance, forty seven (1), 107-138 Lang, D. H. L., Stulz, Ur. M., Walkling, R. A. (1989). Managerial Performance, Tobin‟s Q, and the Gains coming from Succesful Soft Offers. Journal of Financial Economics, 24, 137154 Lintner, L. (1965). Security Prices, Risk and Maximum Gains by Diversification. The Journal of Finance, 20 (4), 587-615 Loughran, Big t., Vijh, A. M. (1997). Do Long-Term Shareholders Reap the benefits of Corporate Purchases? The Log of Finance, 52 (5), 1765-1790 Maquieira, C. L., Megginson, W. L., Fingernail, L. (1998). Wealth creation versus prosperity redistribution in pure stock-for-stock mergers. Journal of Financial Economics, 48, 3-33 Martynova, Meters., Renneboog, M. (2008). A hundred years of corporate and business takeovers: What have all of us learned and where do we stand? Diary of Bank & Financial, 32, 2148-2177 Martynova, Meters., Renneboog, L. (2008). Spillover of business governance standards in cross-border mergers and acquisitions. Log of Business Finance, 13, 200-223 Mulherin, J. L., Boone, A. L. (2000). Comparing acquisitions and divestitures. Journal of Corporate Financing, 6, 117-139 Roll, L. (1986). The Hubris Speculation of Corporate and business Takeovers. The Journal of Business, 59 (2), 197-216 Servaes, H. (1991). Tobin‟s Q and the Gains coming from Takeovers. The Journal of Finance, 46 (1), 409-419 Sharpe, Watts. F. (1964). Capital Property Prices: A Theory of Market Equilibrium under Conditions of Risk. The Diary of Finance, 19 (3), 425-442 Shleifer, A., Vishny, R. Watts. (1989). Management Entrenchement. The truth of ManagerSpecific Investments. Journal of Financial Economics, 25, 123-139 Sirower, M. L. (2006). Avoiding the " Synergy Trap”: Useful Guidance on M& A Decisions for CEOs and Panels. Journal of Applied Business Finance, 18 (3), 83-95 Trautwein, Farrenheit. (1990). Combination Motives and Merger Prescriptions. Strategic Supervision Journal, 10 (4), 283-295 32

Travlos, N. G. (1987). Corporate Takeover Prices for bids, Methods of Payment, and Putting in a bid Firms‟ Stock Returns. The Journal of Finance, 40 (4), 943-963 Treynor, L. (1961). To a Theory of Market Value of High-risk Assets. Unpublished manusscript Walker, M. M. (2000). Corporate and business Takeovers, Strategic Objectives, and Acquiring-Firm Shareholder Wealth. Economical Management, 30 (1), 53-66 Yook, T. C. (2003). Larger Come back to Cash Purchases: Signaling Effect or Power Effect? Log of Organization, 76 (3), 477-498

thirty-three

Share:

Related

 case and comment Dissertation 07.08.2019

case and comment Dissertation

615 07.08.2019

case and comment

Case and comment Of contractual conditions, discharge by performance and breach, innominate terms HONGKONG FIR SHIPPING COMPANY, LTD v. KAWASAKI KISEN KAISHA, LTD. Launch…...

Read →
 hello Composition 07.08.2019

hello Composition

666 07.08.2019

hi there

The book To Kill A Mockingbird is a story about chasteness, knowlege, prejudice and courage. In the beginning the primary character, Search, starts out to be a very immature child…...

Read →
 Essay regarding Character Analysis of At the Bennet in Pride and Prejudice 07.08.2019

Essay regarding Character Analysis of At the Bennet in Pride and Prejudice

267 07.08.2019

Persona Analysis of

Elizabeth Bennet is the most intriguing character that Jane Austen writes going to me. The girl covers every aspect of what it means to become a great key character…...

Read →
 Biology Trypsin Investigation Composition 07.08.2019

Biology Trypsin Investigation Composition

Checking out effect of enzyme concentration on the activity of trypsin. Time allocation efficiently during investigation, by carrying out multiple enzyme reactions at once. 1 ) Check most equipment through…...

Read →
 Apush Ch. 36 Assignment Essay 07.08.2019

Apush Ch. 36 Assignment Essay

456 07.08.2019

Apush Ch. 36 Assignment

Brandon Gonzalez APUSH Per. 3 2/9/11 APUSH Chapter thirty eight Assignment 1 ) In 1932, voters even now had not seen any improvement, and…...

Read →