The Impact of M&A on Acquiring Firm Performance and Shareholder Value: Evidence from Thailand Market.
[Dissertation (University of Nottingham only)]
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This study examines the impacts of merger and acquisition (M&A) announcements on the acquiring firms listed on the Stock Exchange of Thailand (SET). According to prior studies, the evidence for the effect of M&A on the return of acquirers is still mixed. Therefore, this research has been carried out to explore this issue in a Thai context; whether or not M&As lead to positive or negative returns on the acquiring firms’ shareholders.
The research sample consists of 105 M&A deals in Thailand market during the period from 2001-2006. Event study methodology is implemented to investigate the abnormal movement of the acquiring firms’ stock price around the M&A announcement day. In addition, this study also examines firm and deal characteristics and macroeconomic conditions that might influence on the acquirer’s abnormal return including return on equity, firm size, relative size, cash reserves, leverage, P/E ratio, industry relatedness, payment type, target type, interest rate and inflation. OLS multiple-regression is conducted to further explore the relationship between these factors and acquirers’ abnormal return.
The results show that, on average, the cumulative abnormal returns of the acquirers in Thailand are negative around the M&A announcement day. Furthermore, factors that have a significant positive impact on acquirers’ abnormal return include firm size, industry relatedness, cash-financed acquisition and private target acquisition. While return on equity, relative size, P/E ratio, stock-offer acquisition and public target acquisition have significant negative impact on acquirers’ abnormal return. The results for cash reserves, leverage, interest rate and inflation are statistically insignificant, thus no major conclusion can be made.
Keywords: Merger and Acquisition, Thailand market, Event study, Shareholders’ Return
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