Examine The Factors That Affect The Return to Bidder and Target Company Surrounding The Merger and Acquisition Announcements

Yeung, Shun Tony (2006) Examine The Factors That Affect The Return to Bidder and Target Company Surrounding The Merger and Acquisition Announcements. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

As we understand the effect of merger and acquisition (M&A) from the five big M&A waves in the market. It is useful to have some kind of research activity on the profitability of M&A, as both bidders and target firms will interest it. Therefore the primary objective for this study will be to examine the impact of mergers and acquisition on the returns to the shareholders of both bidder and target firms surrounding the announcement days. We will use four different results to examine that (market & market-adjusted models with either industry or broad benchmarks). Our results conclude that that target firm should normally have a positive return, and the bidder's return evidence is not too clear, so we assume that to be zero. Also the merger announcement news and information is relatively efficient to take effect on the stock price. In the method of exchange, our result shows that the target firm will earn the most on the announcement date in cash deal, followed by mixed deal and finally stock deal.

The second objective of this study is to discover any factors that might closely related to returns to target and bidder shareholders on the days surrounding the announcement. We have tested for possible size effects, mean of payment impacts and degree of relation between target and bidder businesses. We have found an evidence contradicting value of control hypothesis.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 05 Jan 2007
Last Modified: 29 Sep 2016 03:16
URI: http://eprints.nottingham.ac.uk/id/eprint/20428

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