M&A: A study of the shareholder returns for UK bidding firms

Longair, Alexander (2010) M&A: A study of the shareholder returns for UK bidding firms. [Dissertation (University of Nottingham only)] (Unpublished)

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This paper examines the effect of merger and acquisitions on the stock returns of bidding companies. This study focuses solely on UK firms but includes acquisitions made both domestically and internationally. It incorporates event study methodology to calculate the abnormal returns around the date of announcement using 11, 5 and 3 day event windows. The study then separates the sample into sub-samples based on bidding firm size, relative industry of the two firms, relative country of the two firms, book-to-market ratio of the bidding firm, relative size of the two firms, time period, and the acquisition experience of the

bidding firm. Hypothesis testing is then used to compare the means of the various sub-samples.

The study found that, on the whole, bidding firms see insignificant positive returns. The comparisons across the sub-samples highlighted large firms to react significantly worse than small firms, domestic acquisitions perform significantly better than international acquisitions, and reactions were significantly better when the firms were of similar size. These were the only comparisons which generated statistically significant results, while there were some interesting trends displayed in the book-to-market sub-samples.

The findings of this study add weight to a number of different issues within M&A literature, including both motives for mergers, and the factors that influence success of mergers.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 18 Jan 2011 16:22
Last Modified: 24 Mar 2018 08:43
URI: https://eprints.nottingham.ac.uk/id/eprint/23977

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