Mergers and the Market for Corporate Control: The Canadian Evidence

Espen, B.

doi:10.2307/135282

Cited by 68 publications

(44 citation statements)

References 26 publications

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“…During the 0-12 month, 0-24 month and 0-36 month periods, the firms that specialised significantly outperformed those that diversified by 2.92%, 3.18% and 6.31%, respectively. These findings contradict the findings of Eckbo (1986), who found no significant performance difference between those firms involved in horizontal mergers (specialisation) rather than vertical mergers (diversification). Overall, the evidence provided in Table 4 confirms our fourth hypothesis.…”

Section: Impact Of Manda Type On Post Manda Long Term Bhar For Bidder Shacontrasting

confidence: 99%

“…In addition these findings are inline to those found by Agrawal et al (1992), Rau and Vermaelen (1998), Loughran and Vijh (1997), and Sudarsanam and Mahate (2003), which suggest that shareholders of bidding firms suffer losses in the long-run. While the results of this study largely confirm the findings of prior studies, they also call into question the findings of other studies, such as Eckbo (1986), who found that bidders in Canadian M&As earned significant positive BHAR in the long-run post-M&A period. Additionally, Loderer and Martin (1992) and Dutta and Jog (2009) present different results as they did not discover any bidder underperformance in the long-run, post-M&A period.…”

Section: Findings and Resultssupporting

confidence: 84%

“…This study further finds that firms that specialised outperformed those that diversified which is consistent with the predictions of our fourth hypothesis. These findings contradict Eckbo's (1986) findings. In particular Eckbo did not report significant difference in performance between those bidder firms that specialised and those that diversified.…”

Section: Summary Of the Resultscontrasting

confidence: 63%

“…This argument implies that when comparing the post-M&A performance of two firms of the same size, the firm that specialises (the firm that focuses on its areas of speciality) may perform better than the firm that diversifies. Though this argument is compelling, academic literature is not conclusive about which type of M&A yields greater returns for bidder firms (Eckbo, 1986). Consequently, our fourth hypothesis is the following:…”

Section: Methods Of Payment Used-cash Vs Stockmentioning

confidence: 94%

“…Using more than 1,900 cases of Canadian M&As, Eckbo (1986) investigated the link between corporate control and M&As. In contrast to the U.S studies, he found that bidder firms made significant gains in the long run post-M&A.…”

Section: Impact Of Mandas On Bidder Firms' Long Run Performancementioning

confidence: 99%

See 4 more Smart Citations

The Long-Run Performance of U.S. Bidding Firms in the Post M&A Period: The Impact of Bid Type, Payment Method and Industry Specialisation

Γιαννόπουλος¹,

Holt²,

Khansalar³

et al. 2017

IJBM

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This study investigates how mergers and acquisitions (M&A) affect the wealth of shareholders of public firms in the United States (U.S). More specifically, it investigates whether the nature of the bid, the payment method used, and the type of M&A have implications for shareholders of U.S bidding firms. The study analyses 352 mergers and acquisitions in the U.S during the period 1999-2008, and its results indicate that bidding firms suffer significant negative buy-and-hold abnormal returns in the three years period after a M&A announcement. The results also suggest that, in the long-run, hostile bids and cash-financed bidders outperform friendly bids and stock-funded bidders, respectively. Furthermore, the study also finds that in the long-run bidder firms that focus on industry specialisation within their M&A targets significantly outperform firms that adopt a more diversified strategy. The analysis also investigates the effects of M&A specialisation/diversification in six different sectors, and finds that specialised bidders outperform diversified bidders in four sectors: consumer & basic materials, energy & utilities, communications and technology. Furthermore, bidder firms in the financial services sector perform significantly better when diversifying into other sectors, while the performance of bidder firms in the industrial sector appears unaffected by the degree of M&A specialisation or diversification.

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Section: Impact Of Manda Type On Post Manda Long Term Bhar For Bidder Shacontrasting

confidence: 99%