Mergers and Acquisitions: Analysis of Effects on Shareholder Value

Zhang, Xiya (2013) Mergers and Acquisitions: Analysis of Effects on Shareholder Value. [Dissertation (University of Nottingham only)] (Unpublished)

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Mergers and acquisitions (M&As) are regarded as a good strategy for companies to expand their scale and make more profits and then become increasingly popular around the global market nowadays. Importantly, mergers and acquisitions not only have the effect on the performance of acquiring and target companies but also create a beneficial or adverse effect on the shareholder of acquiring and target companies. This dissertation is aimed at analyzing the impact of mergers and acquisitions on shareholder’s wealth after the announcement of M&As.

The main methodology is used by an event study and the data involves 120 deals (i.e. 120 acquiring companies in UK and 120 target companies in local countries and foreign countries) in mergers and acquisitions from year 2000 to year 2009. This study picks up two event dates (from t=-10 to t=10 and from t=-10 to t=30) in order to observe thoroughly the effect of the announcement of M&As. Furthermore, the average abnormal return (AAR) and cumulative abnormal return (CAAR) are two vital variables and this study focus on the movements of AAR and CAAR before and after the announcement date.

The findings support that target shareholders gain the significant average abnormal return and cumulative average abnormal return on the announcement date. However, the large positive returns just stay for few days. In addition, the excess returns peak one day prior to the announcement day due to the information leaked. In case of acquiring shareholders, the average abnormal return suffers the lowest point around the announcement day and the cumulative average abnormal return is positive but extremely small over the event time period.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 07 Mar 2014 10:15
Last Modified: 15 May 2016 18:13

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