Revenue enhancement through mergers and acquisitions: wealth effects of method of payment

2012 ◽  
Vol 6 (3/4) ◽  
pp. 274
Author(s):  
Jianyu Ma ◽  
José A. Pagán ◽  
Yun Chu ◽  
Gökçe Soydemir
Keyword(s):  
Mergers And Acquisitions ◽  
Wealth Effects ◽  
Method Of Payment ◽  
Revenue Enhancement

Bank mergers and acquisitions in Greece: the financial crisis and its effect on shareholder wealth

2019 ◽  
Vol 16 (2) ◽  
pp. 273-296 ◽  
Author(s):  
Ioannis Tampakoudis ◽  
Michail Nerantzidis ◽  
Demetres Subeniotis ◽  
Apostolos Soutsas ◽  
Nikolaos Kiosses
Keyword(s):  
Financial Crisis ◽  
Mergers And Acquisitions ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Shareholder Wealth ◽  
Conclusive Evidence ◽  
Wealth Effects ◽  
Bank Mergers ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to investigate the wealth implications of bank mergers and acquisitions (M&As) in the unique Greek setting given the triple crisis phenomenon – banking, sovereign debt and economic crises – that prevailed after the global financial crisis. Design/methodology/approach The study examines bank M&As and bank transactions over the period from 1997 to 2018, as well as government-assisted M&As during the crisis. The wealth effects of bank M&As are assessed using both univariate and multivariate frameworks. Findings Findings show a neutral crisis effect on the valuation of M&As upon their announcement. However, the authors provide conclusive evidence that M&A completions are value-destroying events for acquiring banks during the crisis, far worse than in the pre-crisis period. Greek banks also fail to create value from government-assisted mergers. The results suggest that the financial stability and the prevention of further deepening of the Greek crisis with possible contagion effects were achieved at the expense of shareholders and taxpayers. Originality/value To the authors’ knowledge, this is the first study that examines the impact of the Greek triple crisis on the wealth effects of bank M&As and bank transactions. Also, the study provides first evidence with regard to the economic impact of government-assisted M&As in the European context.

Mergers and acquisitions: implications for acquirers’ market risk

2019 ◽  
Vol 45 (4) ◽  
pp. 545-562 ◽  
Author(s):  
Sailesh Tanna ◽  
Ibrahim Yousef
Keyword(s):  
Mergers And Acquisitions ◽  
Prior Experience ◽  
Systematic Risk ◽  
Cross Sectional ◽  
Content Type ◽  
Cash Payment ◽  
Increase Risk ◽  
Method Of Payment ◽  
Mean Differences ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of mergers and acquisitions (M&As) on acquiring company systematic risk using a global sample of 34,221 completed deals that occurred between the years 1977 and 2012, covering 163 countries and 85 industries. Design/methodology/approach Acquirers’ systematic risk (beta) is calculated using the capital asset pricing model. The change in acquirers’ beta post-merger is obtained using event study and tested for mean differences across various sub-categories of deals. Cross-sectional regressions are then performed to test several hypotheses relating to the impact of diversification, method of payment, target status and prior experience on acquirers’ risk. Findings For the overall sample, the evidence suggests that acquirers’ beta tends to increase post-merger, but only in cases where their pre-merger risk is relatively low in relation to the risk of the market. The authors also show that cash payment deals for publicly listed targets contribute to reducing acquirers’ risk while stock payment increase risk. Diversification, whether global or across industry, has no significant impact on risk. On the other hand, for serial acquirers, the risk is increased significantly with more M&As. Originality/value This study contributes in a unique way by providing global evidence on acquirers’ systematic risk using a very large and diverse sample of M&A deals and investigating not only the impact of diversification on risk but also of other deal characteristics (e.g. method of payment, target status, acquirers’ prior experience) which have not been previously examined.

The effect of corporate governance mechanisms on European Mergers and Acquisitions

2018 ◽  
Vol 18 (5) ◽  
pp. 965-986 ◽  
Author(s):  
Ioannis Tampakoudis ◽  
Michail Nerantzidis ◽  
Demetres Soubeniotis ◽  
Apostolos Soutsas
Keyword(s):  
Corporate Governance ◽  
Mergers And Acquisitions ◽  
Economic Impact ◽  
Abnormal Returns ◽  
Voting Rights ◽  
Shareholder Wealth ◽  
Wealth Effects ◽  
Board Size ◽  
Content Type ◽  
Acquiring Firms

Purpose The purpose of this study is twofold: First, to assess the economic impact of Mergers and Acquisitions (M&As) on European acquiring firms from the beginning of the sixth merger wave onward. And second, to investigate the effect of CG mechanisms such as board size, voting rights and anti-takeover provisions (ATPs) on acquirers’ gains, along with a set of control variables. Design/methodology/approach For the purpose of the study, the authors use a sample of 349 completed M&As across all business sectors between European firms from 01/01/2003 to 31/12/2017. Abnormal returns are estimated by applying an event study methodology, and the effects of CG mechanisms are assessed with univariate and multivariate cross-sectional regressions. Findings The authors present evidence that acquirers realize significant positive excess returns upon the announcement of M&As. The authors find past profitability to be a strong indicator of value creation, while most of the traditional firm-specific and deal variables fail to interpret the results. The authors’ analysis indicates that the examined CG measures have a significant effect on acquirer’s gains. More specifically, the authors find that boards in excess of eight directors are negatively related to announcement-period abnormal returns. In contrast, the wealth effects for acquiring firms are positively related to shareholders’ voting rights and/or to the number of ATPs. The estimated coefficients of all three CG mechanisms are statistically significant across alternative model specifications. Research limitations/implications A clear implication is that the existence of certain CG mechanisms leads to value-enhancing strategic decisions for European acquirers. In terms of policy direction, the authors’ findings assist practitioners and/or national and transnational institutions in perceiving the efficacy of certain CG practices. Practical implications This study indicates that Corporate Governance Statements (CGSs) fail to provide adequate information to investors to understand in-depth the CG mechanisms that companies apply. Thus, the authors recommend that CGSs should provide not only narrative information but also information that may generate value for shareholders and other stakeholders as well. Such information should be qualitative and/or quantitative in nature and be made available to market participants to support their decision-making. Originality/value To the authors knowledge, this is the first study that investigates the effect of CG on the economic impact of M&As for European acquirers, using three widely examined CG mechanisms, namely, the board size, the voting rights and the ATPs. The authors’ empirical findings form the basis for further examination of the linkage between M&As and CG, with the intention of establishing the appropriate CG framework that will ensure shareholder wealth creation. This line of research could produce new insights in the field, allowing investors and policymakers to appreciate the benefits of effective CG.

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