Univ., Diss--Bamberg, 2001.

Being able to predict a merger or acquisition before it takes place could lead to an investor earning a premium, if they owned shares of the targeted firm before the merger or acquisition attempt is announced. On average acquiring firms pay a premium when acquiring or merging with a targeted firm. This study uses publicly available financial information for 7,267 attempted takeover targets and 52,343 non-targeted firms for the period January 3, 2000 through December 31, 2007 to estimate (using logit) predictive models. Financial ratios are constructed based on six hypotheses found in the literature. Although statistical evidence supports a few of the hypotheses, the low predictive power of the models does not indicate the ability to accurately predict targeted firms ahead of time, let alone with any economic significance.

This study investigates what impact mergers and acquisitions have on bank efficiency by examining both pre-merger and post-merger performance. Specifically, the research looks at the effect of bank efficiency on shareholder wealth creation upon bank merger announcement. The study finds supportive evidence that the market takes into account the pre-merger bidder bank’s efficiency in adjusting the bank stock’s price at the time of announcement. This suggests that bank efficiency has a significant positive effect on shareholder wealth creation when a merger is announced. Furthermore, in reacting to the announcement, the market also perceives the prospects for future enhancement of bank efficiency as a result of the current event. Thus, post-merger bank efficiency is found to also contribute to shareholder value creation on merger announcement. In particular, the study finds evidence suggesting that post-merger profit efficiency, rather than cost efficiency, has a positive effect on cumulative abnormal returns. The study investigates 56 commercial bank mergers that took place in 22 European countries between 2001 and 2007. The event study methodology is used to determine shareholder wealth creation, employing the market model in estimating expected returns. Efficiency is estimated using the parametric stochastic frontier approach. Performance improvement in the combined firm is obtained by comparing post-merger efficiency with pre-merger efficiency, which is the sum of bidder and target efficiencies after weighting them based on their pre-merger total assets. To find out whether efficiency has an effect on shareholder value creation, regression analyses are performed involving cumulative abnormal returns, a few efficiency variables, and a number of control variables. The main finding of this study is that pre-merger bank efficiency contributes to short-term shareholder value creation upon merger announcement. Some evidence is also found that post-merger bank efficiency has a positive effect on shareholder value creation at announcement time which is associated more with profit efficiency than with cost efficiency. Also, as the study finds statistically significant positive cumulative abnormal returns, the results of this study are supportive of the view that, increasingly, European merger studies that examine post-2000 data find that bank mergers are value-creating even for the bidding firms. Evidence that pre-merger bank efficiency has a positive effect on cumulative abnormal returns, and that the market takes into account perceived future bank efficiency on merger announcement, underscores the importance of efficiency as a performance measure. If how the market reacts to a merger announcement reflects future efficiency performance, shareholders, policy makers, and other stakeholders may be able to take that as one of the factors on which they can base their decisions regarding the yet uncompleted merger. They can also use previous efficiency records for predicting short-term and long-term performance of prospective parties to a merger before announcement.

The significant impact of method of payment on the share price abnormal returns following mergers and acquisitions have been broadly considered and documented in US and UK empirical studies (Agrawal and Jaffe 2000). In the UK, all-cash acquisitions show insignificant negative or small positive abnormal returns, whilst the all-equity acquisitions have significant negative returns. Whilst it is tempting to conclude that it is simply the form of financing that separates the shareholder value destruction of equity-financed takeovers from cash takeovers, such a conclusion tends to ignore the question of where the cash to fund the acquisition comes from in the first place. Theory tells us this should matter. Whilst different theories on firm financing offer competing explanations on both managerial choices and shareholder preferences, it seems reasonable to ask the question whether the source of the cash influences the long run wealth effect of the acquisition. In order to shed light on this issue, this investigation looks at short-term daily abnormal returns as well as long-term abnormal returns including a five-year horizon of post-takeover returns and a three-year horizon of pre-takeover returns. The short-term daily abnormal returns support the signalling information hypothesis to some extent as acquirers financing takeovers using internal cash out-perform those financing takeovers by equity or debt issues. After categorizing the research sample firms into two sub-groups, one being internal funding while the other being external sources including equity or debt, the share price abnormal returns show statistically significant differences between these two sub-groups over 11-day event windows. Further, by using one- and two-dimensional analyses and a univariate test, the results reveal that UK cash acquisitions explored by this investigation contradict the free cash flow (FCF) hypothesis. Regression models show that book-to-market ratio is important in explaining the short-term daily abnormal returns. The long-term post-takeover stock performances show sensitivity to the benchmark adopted as well as the calculation used for the long-term abnormal returns, i.e. cumulated or compounded. Owing to the small sample firms entering the calendar time monthly portfolios, the calendar time approach employs White (1980) corrections and a GLS model to mitigate the effects of heteroskedasticity in the research sample. Generally speaking, long-term abnormal returns show a negative pattern for the whole sample as well as the sub-groups depending on their dominant financing methods. Furthermore, the univariate and multivariate tests demonstrate that the FCF hypothesis cannot explain the 60-month share price abnormal returns of the research sample. According to the coefficient derived from regression model(s), the most significant factor to predict 60-month abnormal returns is relative size (market value of target to that of bidder). The results suggest that the bigger the relative size of the target, the more negative the abnormal return will be (Hansen 1987, Martin 1996, Loughran and Vijh 1997). Besides, the institutional investors contribute a positive effect on long-term share price performance, which is consistent with the findings of Chen, Harford, and Li (2007). The pre-takeover share price abnormal returns over three years intervals prior to the bid announcements clearly show that cash acquirers overall experience a significant positive stock performance. This result is robust to adopting various benchmarks of event time and calendar time regression-based framework. Based on the dominant financing method used for the acquirers, firms issuing debt before the bid announcements do perform extremely well. Those firms subsequently perform badly for post-takeover long-term intervals. Accordingly, this phenomenon demonstrates a mean reversion picture. Regardless of whether an event time or a calendar time approach is used, high q firms always have higher abnormal returns even when allowing for other factors, such as free cash flow or cash stock. However, multinomial logistic tests fail to find any statistically significant link between pre- takeover abnormal returns and the form of financing.

In this doctoral dissertation is solved the relation between success in a field of mergers and acquisitions activities with connecting to existence of "agency costs" in stated companies. A domain of mergers and acquisitions is a very complex and dynamic section that includes not only economic relations connected with joinnig enterprises, but also accountancy and law environment, where mergers and acquisitions are realized.

Countries with high levels of growth-fostering business deregulation for domestic small and medium scale enterprises (SMEs) appear to attract more FDI inflows than countries with low levels of business deregulation. This may be because SMEs in such deregulated countries attract ample cross-border mergers and acquisitions (M&As), which are a major conduit of FDI inflows. This study therefore investigates the relationship between FDI inflow and business deregulation. The study employs a triangulation of quantitative research methodologies and a panel data of 154 countries to analyze the relationship between FDI and deregulation. Results from the study generally show that there are statistically significant and inversely proportional relationships between inbound FDI and the deregulation of: (i) starting a business, (ii) paying taxes, and (iii) export trading, by a country‘s domestic SMEs. The study also documents positive correlations between cross-border M&As and inbound FDI. Thus, countries are likely to attract more FDI inflows, especially through cross-border M&As, as they deregulate the: starting of businesses, payment of taxes and exportation of products for their domestic SMEs. Therefore, on policy front, it is recommended that in order to enhance FDI inflows, countries ought to deregulate these areas of infringement to efficient running of SMEs; this finding provides a complementary and/or substitute policy to the popular outward-looking incentive programs for attracting FDIs.

I study how the properties of management earnings forecasts change after a firm merges with or acquires another company. I find management is more likely to issue a forecast in a merger or an acquisition firm-year than in a non-M&A firm-year. Compared to forecasts issued by the firm in non-M&A periods, the first forecast issued after completing an M&A deal is less likely to be bundled with an earnings announcement and the forecast range is wider, although more likely to be optimistic than non-M&A forecasts. I find the increase in forecast range width and optimism persist in forecasts issued up to the end of the fiscal year but are not present in the initial forecast issued in the subsequent year. Finally, I find variation in M&A experience and M&A type influence management earnings forecast properties. Because prior studies of management forecasts often delete observations containing mergers and acquisitions or simply include the firm’s market-to-book, my study informs researchers about how the properties of management forecasts are impacted by the uncertainty from a merger or an acquisition.

Zugl.: Oestrich-Winkel, Europ. Business School, Diss., 2007.

Since it is a normal path for business to go for internationalization through merge and acquisition, there are always cases that end up with non expectable results. Therefore, there do exist huge risks in doing merge and acquisition. However, the probability of making a successful merge and acquisition could be improved by applying for appropriate strategic concerns. Finally, it is essential for managerial implications to find out the key factors of successful merge and acquisition. The thesis tried to find out factors that affect the process, and the outcome of merge and acquisition. By interviewing these key persons of W Company, we concluded with problems including culture, leadership, organization process, and human resources management that do have significant influence on the merge and acquisition progress. Furthermore, we try conclude and making hypotheses according to our interview. The purpose of our thesis was to discuss factors that affect the performance of merge and acquisition, such as corporate culture, leadership, operation process, and organization. According to the conclusions made from Narrative Method, it showed that these factors to some extent did have significant influence on the performance of post merge and acquisition. Therefore, anyone who wants to have splendid performance of merge and acquisition could not ignore these ones. According to the results, as we defined that whenever the performance ¡§turns from loss to profit,¡¨ it means that the merger is getting into success. Therefore, as the case is making huge profit many years after the action of merger, this is really a ¡§success¡¨ case. Therefore, the propositions and survey records are really precious and referral literatures for practical and academic.

Integration through strategy of mergers and acquisitions have become popular all over the world thanks to globalization, technological developments, liberalization, and saturated competitive business environment. On The Journal published on www.globusz.com, it has been announced that the number of M&A corporations has reached 5000 mergers, and the total value of the companies acquired is of about $1.7 trillion in 2000. In USA, it was the period where the most important and largest M&As were ever announced, it was the year where AOL and Time Warner were merged. Most of researches conducted on M&A activities have recognized that firms prefer to enlarge their activity by merging or acquiring new businesses rather than enlarging organically. However, in some cases, results collected are not the ones expected. IBM has made about 800 strategic alliances, Hewlet Packard about 300, and AT with T about 400. This proves that those alliances either with strategic suppliers, or with competitor or partners, they are an effective and a prompt access towards capital increase, talents discovery, effective distribution channels and manufacturing productive designs or operations. According to a study conducted by Coopers and Lybrand, companies that form strategic alliances grow 20% faster and gain 11% more in sales than those who choose to rely solely on their own expertise (Segil 1998). The study also identified that two thirds of middle level firms have entered some form of alliance: 37% with their customers; 35% with their suppliers; 15% with competitors. The gaining from M&As is said to be a means of protecting the market share and of expanding growth domestically and internationally, because it leads to more beneficial using of resources and assets, to more efficient managеmеnt, and to еcоnomies of scale, etc.  Thus, the question to raise is: do results of M&As create real value for the shareholders of acquirers?