Value Creation in M&A Transactions, Conference Calls, and Shareholder Protection

Abstract

This study investigates whether conference calls accompanying M&A announcements in Europe provide valuable information for capital market participants and hence induce an abnormal stock price revaluation on the bidder's equity. Based on handpicked data for transactions between 2008 and 2012 we focus on the five most acquisitive country markets in Europe. Overall, our results show that bidders are more likely to conduct conference calls with increasing transaction value, for transactions with public targets and non-diversifying transactions. Further, the decision for voluntary disclosure is positively influenced by increased bidder size and the comparably weaker governance systems for German and Swiss firms. After controlling for self-selection bias and other determinants of stock returns around mergers and acquisitions (M&A) announcement, evidence is in strong support that firms with merger-related conference calls yield a higher abnormal return than firms merely publishing a press release. However, significant favourable investor reaction is only present in the UK and French subsamples and in the subsamples of industries with a focus on research and development (R&D).

Investor Response to Financial Performance and Business Prospect

“…In their study, [45] said that abnormal returns increased three days before the M&A announcement and became significant after the announcement date. According to [50] and [51] investor response to M&A depends on the information obtained. According to [52] research, bidders with a political advantage will get higher abnormal stock returns around the announcement date.…”

The Effect of the Profitability on the Valuation Models: Evidence from Italian Acquisitions

“…Hence the clarification of the research question that will accompany the entire study: does the book-to-market ratio manage to appreciate the economy of a company in times of economic-financial crisis and, as a result, of strategic M&A choices? (See Alexandridis, Antypas, & Travlos, 2017;Fraunhoffer, Kim, & Schiereck, 2018;Liberatore, 2010 andLiberatore, Amaduzzi, Comuzzi, &Ferraro, 2014;Magli, Nobolo, & Ogliari, 2017).…”

Multimodal Multi-Speaker Merger & Acquisition Financial Modeling: A New Task, Dataset, and Neural Baselines

“…Building on the important information that M&As provide, academic research, the financial press, and other media give a great deal of attention. One of these discussions' principal aspects lies in how the deals may affect the company's valuation (Moeller et al, 2003;Fraunhoffer et al, 2018) and future growth. A significant focus in financial and economic literature has been on understanding whether M&As create or destroy value.…”