scholarly journals The market impact of mergers and acquisitions on acquiring firms in the U.S.

2014 ◽  
Vol 6 (2) ◽  
pp. 30-37 ◽  
Author(s):  
Stunda Ronald
Keyword(s):  
Mergers And Acquisitions ◽  
Market Impact ◽  
Acquiring Firms ◽  
The U.S

scholarly journals Tradability and the Labor-Market Impact of Immigration: Theory and Evidence from the U.S.

2017 ◽  
Author(s):  
Ariel Burstein ◽  
Gordon Hanson ◽  
Lin Tian ◽  
Jonathan Vogel
Keyword(s):  
Labor Market ◽  
Market Impact ◽  
The U.S

scholarly journals Creditor-Focused Corporate Governance: Evidence from Mergers and Acquisitions in Japan

2011 ◽  
Vol 46 (4) ◽  
pp. 1051-1072 ◽  
Author(s):  
Vikas Mehrotra ◽  
Dimitri van Schaik ◽  
Jaap Spronk ◽  
Onno Steenbeek
Keyword(s):  
Corporate Governance ◽  
Mergers And Acquisitions ◽  
Dominant Role ◽  
Sharp Contrast ◽  
Distinctive Features ◽  
Target Firms ◽  
The World ◽  
Main Bank ◽  
The U.S

AbstractMergers in Japan have the dubious distinction of not creating wealth for shareholders of target firms, in sharp contrast to what occurs in much of the rest of the world. Using a sample of 91 mergers from 1982 through 2003 we document several distinctive features of the merger market in Japan: Mergers tend to be countercyclical and appear to be driven chiefly by creditor concerns. In particular, where the merging firms share a common main bank, we find that merger gains are lower. Overall, our results point to a market that is distinctly less shareholder focused than that in the U.S., and a market where creditors play an important, perhaps dominant, role in corporate governance.

Do mergers and acquisitions create value?

2019 ◽  
Vol 36 (2) ◽  
pp. 240-264
Author(s):  
Krishna Reddy ◽  
Muhammad Qamar ◽  
Noel Yahanpath
Keyword(s):  
Mergers And Acquisitions ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Developed Economies ◽  
Acquiring Firms ◽  
Significance Levels ◽  
Chinese Markets ◽  
Specific Factors

Purpose The purpose of this paper is to study whether mergers and acquisitions (M&As) create value in Indian and Chinese markets. Design/methodology/approach The authors study abnormal returns (AR) created by the acquiring firms in Indian and Chinese markets relating to M&A announcements, using the following three different statistical methods: i.e. mean, market and ordinary least squares adjusted return models. Findings On average, M&A announcements do not create value for the firms in Chinese and Indian economies. For the mean model, M&As create value for Chinese firms, whereas for the Indian firms no such value is created for the same event windows. The regression results showed that debt has a positive impact on the AR and cumulative average abnormal returns at 1, 5 and 10 per cent significance levels, respectively. Research limitations/implications This study suggests increasing the sample size and period and using the instrumental variables regression to ensure the estimator’s impartiality, consistency and efficiency. With the investigative period surrounding a financial crisis, the estimators may have omitted bias. Originality/value Multiple methods used in this paper made it possible to capture the level of method variance in the AR, which is unusual in the Chinese and Indian context. Hence, the current study provides local knowledge and further strengthens the literature about M&As. The authors also regress AR with firm-specific factors, the consideration of which is scarce in the previous literature. Furthermore, much of what the authors know about M&A is relevant to developed economies.

The Costs of Mergers and Acquisitions in the U.S. Health Care Sector

1997 ◽  
Vol 27 (1) ◽  
pp. 77-87 ◽  
Author(s):  
Patrick Bond ◽  
Robert Weissman
Keyword(s):  
Health Care ◽  
Mergers And Acquisitions ◽  
Health Care Industry ◽  
The United States ◽  
Industry Concentration ◽  
Care Industry ◽  
Consumer Concerns ◽  
Pharmaceutical Industries ◽  
Pricing Power ◽  
The U.S

Important trends are emerging from evidence of health care industry concentration in the United States. Some of these are the durable consumer concerns—cost, choice, and access—which have received attention throughout the introduction of managed care. But with the intensified industry concentration, these have been joined by concerns about pricing power, control and quality, integrity of the health system and health policy-making, and clashing institutional mandates. Such trends are particularly evident in the hospital and pharmaceutical industries.

The Effects of Mergers and Acquisitions on Taiwanese Corporations

2000 ◽  
Vol 03 (02) ◽  
pp. 183-199 ◽  
Author(s):  
Tsung-Ming Yeh ◽  
Yasuo Hoshino
Keyword(s):  
Stock Market ◽  
Mergers And Acquisitions ◽  
Stock Returns ◽  
Stock Prices ◽  
Corporate Performance ◽  
Accounting Performance ◽  
Acquiring Firms ◽  
The Impact

This paper investigated the impact of M&As on both the acquiring firms' stock prices and corporate performance by using evidence from 20 Taiwanese corporations. Our data suggest that the accounting performance of Taiwanese acquiring firms failed to meet the stock market's expectation of future improvements in the operations of the acquiring firms. The stock market reacted in favor of the announcements of M&As, however, there is a downward change in the acquiring firms' profitability from premerger to postmerger periods. However we do not find any significant correlation between stock returns and the change in accounting performance, which is different from some previous studies.

scholarly journals A comparison of earnings management between domestic and cross-border mergers.

2010 ◽  
Vol 7 (4) ◽  
pp. 19-33
Author(s):  
Amy Yueh-Fang Ho
Keyword(s):  
Asymmetric Information ◽  
Mergers And Acquisitions ◽  
Earnings Management ◽  
Information Asymmetry ◽  
Discretionary Accruals ◽  
Informational Asymmetry ◽  
Empirical Results ◽  
Cross Border ◽  
Acquiring Firms ◽  
International Mergers

This study examines how U.S. acquiring firms managed their earnings by means of discretionary accruals prior to the announcement of stock-for-stock domestic and cross-border mergers during the period 1980 to 2002. The objective of this study is to determine whether earnings management is exacerbated in cross-border mergers according to the informational asymmetry hypothesis. The results show that that acquiring firms tend to manage earnings upward prior to stock swap domestic takeovers. In addition, the results reveal some evidence of earnings management prior to stock swap cross-border takeovers. However, the empirical results exhibit no significant distinction in earnings management between the domestic and cross-border mergers. Despite the possible existence of asymmetric information associated with cross-border takeover activities, the international mergers and acquisitions do not facilitate managers to engage in more aggressive earnings management. The findings suggest that the higher degree of information asymmetry in cross-border mergers does not contribute to a higher degree of earnings management.

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.

scholarly journals Why bidding firms do not hire financial advisors in mergers and acquisitions

2008 ◽  
Vol 5 (3) ◽  
pp. 316-323
Author(s):  
Wallace N. Davidson III ◽  
Shenghui Tong ◽  
Richard Proctor
Keyword(s):  
Mergers And Acquisitions ◽  
Transaction Costs ◽  
Information Asymmetry ◽  
Control Sample ◽  
The Other ◽  
Investment Banks ◽  
Financial Advisors ◽  
Primary Reason ◽  
Investment Bank ◽  
Acquiring Firms

In this paper, we examine why some bidders decide not to hire investment bank advisors in M&A transactions. We build a sample of 181 M&A transactions in which the acquiring firms do not hire investment bank advisors, and compare them with a control sample of 181 M&A transactions in which the acquiring firms hire investment bank advisors. We find that the transaction costs are the primary reason that investment banks are hired as advisors for bidders in M&A transactions. In addition, the information asymmetry and contracting costs are the other two reasons that bidders hire investment banks in M&A transactions.

Impact of Mergers and Acquisitions on Accounting-based Performance of Acquiring Firms in India

2019 ◽  
pp. 097215091985200
Author(s):  
Puja Aggarwal ◽  
Sonia Garg
Keyword(s):  
Mergers And Acquisitions ◽  
Service Sector ◽  
Manufacturing Firms ◽  
Medium Term ◽  
Paired Sample ◽  
Similar Comparison ◽  
Acquiring Firms ◽  
Restructuring Strategy ◽  
Work Done ◽  
The Impact

Purpose: Merger is a corporate restructuring strategy that affects the performance of the company on many parameters. This study aims to examine the growth of M&A transactions in India in last two decades and the impact of merger on the accounting-based performance of the acquiring company. Methodology: The data of 68 mergers during the year 2007-08 - 2011-12 is analysed to capture the said impact. The accounting-based performance is measured on seven variables divided into three categories- profitability, liquidity and solvency. The accounting-based performance five years’ pre-merger is compared with five years’ post-merger. The similar comparison is done for 3 years pre and post-merger. Average of all the 7 parameters pre and post-merger are compared arithmetically and then using paired sample ‘t’test. The firms were also divided into manufacturing and service sector firms to see the impact of merger on different categories of firms. Findings: We found that merger has significantly impacted profitability and liquidity of the acquiring firm positively in five years but had no significant impact on solvency position of the company. Service sector firms have outperformed manufacturing firms and started showing significant improvement in accounting variables in medium term. Originality: We assure the originality of the work done in this article.

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