Mergers and Acquisitions: Evaluation of Impacts on Firm Performance – The UK Evidence

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Wang, Dian (2014) Mergers and Acquisitions: Evaluation of Impacts on Firm Performance – The UK Evidence. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

The number of mergers and acquisitions are rapidly increasing in emerging market in

recent years and M&As have become the most important and practical corporate tool

to pursue firm’s external growth. M&A activities not only can expand market shares

but also create value for companies and shareholders. This paper investigates the

impact of mergers and acquisitions on the stock returns of acquiring firms in the UK

market for the period between 2001 and 2005. This research firstly introduces some

concepts of M&A, such as definitions, types, motivations and so on. Then it reviews

some relevant findings of previous empirical works. Furthermore, event study is

regard as the main methodology of this study and the research is conducted based on

two even windows: five-day (-2, +2) and eleven-day (-5, +5). Besides, we use

cross-sectional regression to examine which factor would be the most influenced

determinant on bidder’s performance. Our result reveals that bidding firms on average

receive positive abnormal returns around the announcement date. In terms of targets

status, the evidence shows that acquisitions generate statistically significant positive

returns to bidders when they acquire private and subsidiary targets while insignificant

negative returns when they acquire public targets. By analysing the sub-samples of

different factors (i.e. relative size, acquirer size, methods of payment, acquirer’s

book-to-market ratio and industry), we find that the most influenced factors are cash

payment and relative size of acquisitions, and both of them have positive effect on

firm’s performance during M&A activities.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 12 Nov 2014 09:07
Last Modified: 19 Oct 2017 14:01
URI: https://eprints.nottingham.ac.uk/id/eprint/27533

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