Advertisement

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.

Keywords

Abnormal Return Announcement Return Transaction Size Single Bidder Automotive Supply 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Copyright information

© Gabler | GWV Fachverlage GmbH 2009

Authors and Affiliations

  • Jan-Peer Laabs

There are no affiliations available

Personalised recommendations