Study 1: Determinants of Capital Market Performance
Over the last decades, wealth creation through mergers and acquisitions has been extensively discussed in empirical finance research. With a variety of different approaches and foci, authors focusing on short-term announcement effects unambiguously conclude that mergers and acquisitions seem to create value. However, as this short-term value creation potential is mostly attributed to the shareholders of the target companies (Bradley, Desai, and Kim (1988), p.31), a closer look at the returns to acquiring firms reveals a different pattern: While short-term announcement returns for acquiring companies average at around zero (Bruner (2002)), long-term post-merger returns even indicate significant value losses on the acquirer side. In the light of ongoing merger activity and consolidation, these negative reactions pose a challenge to the management of merging companies and call for a comprehensive list of determinants for the direction and magnitude of the experienced value effect.
KeywordsAbnormal Return Announcement Return Transaction Size Single Bidder Automotive Supply
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