Shareholder wealth effects of corporate takeovers

Franks, Julian R.; Harris, Robert S.

doi:10.1016/0304-405x(89)90057-3

Cited by 354 publications

(240 citation statements)

References 44 publications

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“…As a transaction-specific control variable, RELATIVE SIZE between bidder and target (Moeller et al 2004;Seth 1990) is defined as the index of bidder sales to target sales and deal value to market capitalization as a percentage. Other binary control dummy variables include (1) PUBLIC, for listed target companies (Chang 1998, Officer 2007; (2) CASH, for purchase price payments in cash (Faccio and Masulis 2005;Travlos 1987); (3) HOSTILE, for transactions with a hostile attitude (Franks and Mayer 1996;Loughran and Vijh 1997); (4) TOEHOLD, for previous minority shareholdings (Betton et al 2009;Franks and Harris 1989); (5) CROSSBORDER, for foreign targets (Goergen and Renneboog 2004;Rossi and Volpin 2004); and (f) CONGLOMERATE, for conglomerate acquisition direction (Healy et al 1992;Morck et al 1990). Regarding the latter control variable, CONGLOMERATE, it is important to highlight that this information is used in order to filter out the effect on each single transaction.…”

Section: Additional Control Variablesmentioning

confidence: 99%

Lost in transaction? The transfer effect of strategic consistency

Fehre

Kronenwett

Lindstädt

et al. 2015

Bus Res

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Prior empirical studies provide evidence that the learning-curve perspective from manufacturing settings is not directly applicable to strategic management settings. In the latter case learning relates to the quality rather than to the quantity of experience. Regarding the antecedents of organizational learning especially, there are still unanswered questions remaining; for example, the questions what kind of experience has a positive effect on performance and what kind of experience is more of a hindrance than a help. This becomes obvious when looking at acquisitions as examples of strategic management decisions. Results of prior empirical studies analyzing the relationship of acquisition experience and acquisition performance have been mixed. By introducing the concept of strategic consistency, we intend to facilitate a better understanding of the kind of experience necessary for organizational learning. Therefore, we measure the concordance and frequency of change in strategic actions. Employing a sample of 379 acquisition series, we find evidence for a positive transfer effect of strategic consistency within series and, therefore, a positive relationship between strategic consistency and acquisition performance.

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Section: Additional Control Variablesmentioning

confidence: 99%

Lost in transaction? The transfer effect of strategic consistency

Fehre

Kronenwett

Lindstädt

et al. 2015

Bus Res

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“…The results found do not allow to come to a clear conclusion 1 . For example Dodd and Ruback (1977), Kummer and Hoffmeister (1978), Bradley 2 (1980), Jarrell and Bradley (1980), Asquith, Bruner, and Mullins (1983), Bradley, Desai, and Kim (1988) and Franks and Harris (1989), found significantly positive values for both bidder and target companies. Smith and Kim (1994) confirmed negative values throughout the pre and post acquisition period.…”

Section: Literature Reviewmentioning

confidence: 96%

“…In the 12 months post-merger, considering the date of approval of the merger, the average abnormal returns were highly negative (-13.7%) and statistically significant. Franks and Harris (1989), on a sample of more than 1,800 mergers in the UK in the period 1955-1985, found that the acquiring companies registered significant and negative abnormal returns (-12.6) in the two years following the completion of the merger. Gregory (1997) observed a sample of 452 M&As in the UK during the period 1984-1992 using six different benchmarks and pointed out negative and statistically significant and variable CARs between -11.8% and -18%.…”

Section: Literature Reviewmentioning

confidence: 99%

The Post-Merger Performance: Evidence From Italy

2012

CBR

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The objective of this paper is to investigate whether mergers create value for shareholders in both the short and long term. For this purpose, 120 announcements of mergers that were registered in Italy during the period 1994-2006 among listed companies were examined. The short-term analysis was conducted using the event study methodology in order to estimate the cumulative abnormal returns (CARs) in the time window around the announcement date (-10, +10). In this work, the sample of 120 mergers was divided into two sub-samples: the first considers the mergers that were carried out in all sectors of the economy, and the second focuses only on bank mergers. From the results obtained it would appear that, while the sub-sample of all mergers registered a statistically significant value creation for the shareholders of both the bidder and target companies, values also confirmed by combined analysis, the second sub-sample registered negative values for bidder companies and positive values for target companies. Negative values also seem to be confirmed by the results of the combined analysis both at the date of announcement and throughout the entire period of observation. For the long-term analysis, the Buy and Hold Abnormal Returns (BHARs) methodology was used, with which it was possible to observe the returns for three years. In the 36 months following the merger, the portfolios showed a significant destruction of value.

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“…Grimm & Co, and later its legal successors (now it is Business Valuation Resources), have started to collect statistical data on publicly announced mergers and acquisitions and publish the Mergerstat Review bulletin, which contain the statistical data on M&As with the involvement of USA companies [3]. Starting from 1980s the activity of European M&A researchers [4][5][6][7][8][9][10][11], and from 2000s the activity of the Asian ones [12][13][14][15][16][17], has increased. Nowadays there are a lot of scientific papers devoted to the research of global and several national M&A markets trends.…”

Section: Introductionmentioning

confidence: 99%

The genesis of the Russian mergers and acquisitions market: the role of the industrial sector

Aleksey

2017

SHS Web Conf.

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Abstract. The article presents the Mergers and Acquisitions quantity and aggregate cost dynamics analysis with the involvement of Russian companies as of from 2001 to 2015. The statistical information on the quantity and volume of M&As in Russia and worldwide was used as an initial benchmark data for the research. The article deduces the conclusion that the dynamics of Russian M&A market development resembles the international one in the whole period up to the year 2014. Starting from 2014 Russian and international M&A markets shows polar trends. This fact connected chiefly to the negative trends in Russian economy due to economic sanctions and weak exportable raw products prices. The article also gives the analysis of Russian M&A market structure from several different perspectives: transactions prices range, capital flow, and integration fields. The main specific features of Russian M&A market are outlined in the light of the reviewed aspects: almost a half of M&A market value is formed through major transactions; internal transaction dominance (sellers and buyers are Russian companies);most of the deals are conducted with involvement of industrial enterprises. The results of this study can be used in forecast development of Russian M&A market trends.

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Shareholder wealth effects of corporate takeovers

Cited by 354 publications

References 44 publications

Lost in transaction? The transfer effect of strategic consistency

Lost in transaction? The transfer effect of strategic consistency

The Post-Merger Performance: Evidence From Italy

The genesis of the Russian mergers and acquisitions market: the role of the industrial sector

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