Performance Implications of Participating in an Industry Merger Wave PDF Download
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Languages : en
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In this thesis the performance implications for acquirers participating in an industry merger wave were studied from a short-term and long-term perspective. In line with findings from previous research, it was observed that acquisition performance tends to decrease over the course of an industry merger wave while following a U-shaped pattern, which indicates that acquisition performance is lowest at the peak of an industry merger wave but slightly improves thereafter. These findings were confirmed using both short-term abnormal returns and long-term industry-adjusted returns. Thus, with respect to the performance implications associated with the relative position of an acquisition within a wave, it appears that there exists a strong link between market expectations formed immediately after the announcement of a deal and firms' long-term stock performance, a link which has generally been debated in mergers and acquisitions research. Additionally, as in the study of McNamara, Haleblian, and Dykes (2008), potential moderating effects on acquisition performance related to industry and firm characteristics were analyzed. While not all of these moderating effects showed consistent results across all alternative performance measures, a newly introduced variable based on acquisition rhythm was identified to be significant in both the short-term and long-term models, which provided evidence that the variability in acquisition rate seems to be an influential factor for acquisition performance in the context of industry merger waves. After rerunning all models on a more recent dataset covering ten new industry merger waves between 2001 and 2012, it was found that surprisingly few of the initially identified effects could be reconfirmed.
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Languages : en
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Book Description
In this thesis the performance implications for acquirers participating in an industry merger wave were studied from a short-term and long-term perspective. In line with findings from previous research, it was observed that acquisition performance tends to decrease over the course of an industry merger wave while following a U-shaped pattern, which indicates that acquisition performance is lowest at the peak of an industry merger wave but slightly improves thereafter. These findings were confirmed using both short-term abnormal returns and long-term industry-adjusted returns. Thus, with respect to the performance implications associated with the relative position of an acquisition within a wave, it appears that there exists a strong link between market expectations formed immediately after the announcement of a deal and firms' long-term stock performance, a link which has generally been debated in mergers and acquisitions research. Additionally, as in the study of McNamara, Haleblian, and Dykes (2008), potential moderating effects on acquisition performance related to industry and firm characteristics were analyzed. While not all of these moderating effects showed consistent results across all alternative performance measures, a newly introduced variable based on acquisition rhythm was identified to be significant in both the short-term and long-term models, which provided evidence that the variability in acquisition rate seems to be an influential factor for acquisition performance in the context of industry merger waves. After rerunning all models on a more recent dataset covering ten new industry merger waves between 2001 and 2012, it was found that surprisingly few of the initially identified effects could be reconfirmed.
Author: Timo Gebken
Publisher: GRIN Verlag
ISBN: 3640264754
Category : Business & Economics
Languages : en
Pages : 166
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Doctoral Thesis / Dissertation from the year 2008 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: Summa cum Laude, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, language: English, abstract: Empirical corporate finance research analyzes the link between major corporate decisions and the shareholder value development of the respective companies. Enhancing the welfare of shareholders is a fundamental and common objective of all firms and corporate managers are required to implement policies consistent with shareholder welfare. However, the financial literature shows that major corporate decisions are not associated with stock market gains to the respective companies. Especially, the mergers and acquisitions related literature shows that the returns to bidding firm shareholders are essentially zero when they pursue an acquisition. Due to these empirical results, there is an ongoing debate why so many value decreasing decisions occur and how the success of corporate actions is related to company specific internal characteristics and the firms’ external environment. Timo Gebken’s dissertation contributes to this debate. Timo links the time series behavior of industry specific M&A activity to the shareholder wealth effects of the transactions. The majority of deals within an industry occur in very short time periods, so called industry merger waves. These industry merger waves are characterized by a fast consolidation process, which drastically changes the competitive environment for all firms within the industry. Timo analyzes how and why this rapidly changing environment influences the shareholder wealth effects of M&A activity. His results show that the gains associated with transactions change dramatically during an industry merger wave. At the beginning of an industryspecific consolidation process, mergers and acquisitions are accompanied by significantly positive returns to the merging firms and by positive intra-industry effects. In contrast, at the end of an industry merger wave, the shareholder wealth effects are significantly negative. To explore the reason for these results, Timo links the gains to the merging firms to the respective intra-industry effects and to key target characteristics. He shows that targets often possess very scarce resources towards the end of an industry merger wave. The corresponding increased competition for the “last” targets leads to increasing competitive effects at the intra-industry level and to higher premiums paid by bidding firm shareholders. Due to these mechanisms, the gains associated with M&A activity decrease significantly as an industry-specific consolidation process continues.
Author: 魏希妮
Publisher:
ISBN:
Category :
Languages : en
Pages : 120
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Author: David Faulkner
Publisher: OUP Oxford
ISBN: 0191628042
Category : Business & Economics
Languages : en
Pages : 774
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Book Description
With its inception at the end of the nineteenth century as a means of consolidation and reorganization, mergers and acquisitions (M&A) have since become quasi-institutionalized as one of the primary strategic options for organizations, as they seek to secure their position in an ever more competitive and globalizing market place. Despite the optimism surrounding M&A as strategic moves, research on post-merger company performance suggests that most firms engaging in M&A activity do not achieve the sought-after performance targets, either immediately or in the years following the deal. What is it that drives M&A activity when research results do not support the performance expectations of these undertakings? Alternatively, have M&A scholars got it all wrong in the way that M&A performance is measured? Is the topic too complex, enduring, and multifaceted to study? The Handbook argues that the field of M&A is in need of a re-rooting: past research needs to be critically reviewed, and fundamental assumptions revisited. A key issue preventing efforts in the practice and study of M&A from achieving dynamic syntheses has been the disciplinary gulf separating strategy, finance, and human relations schools. The Handbook aims to bridge the hitherto separate disciplines engaged in the study and practice of M&A to provide more meaningful results. Toward this end, the Handbook brings together a set of prominent and emerging scholars and practitioners engaged in the study of M&A to provide thought-provoking, state of the art overviews of M&A through four specific 'lenses' - strategic, financial, socio-cultural, and sectorial approaches. By summarizing key findings in current research and exploring ways in which the differing approaches could and should be 'synthesized', it aims to highlight the key issues facing M&A practitioners and academics at the dawn of the third millennium.
Author: Richard A. D'aveni
Publisher: Simon and Schuster
ISBN: 1439122636
Category : Business & Economics
Languages : en
Pages : 350
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Book Description
General Motors and IBM have been battered to their cores. Jack Welch, the chairman of General Electric, called the frenzied competition of the 1980's "a white knuckle decade" and said the 1990s would be worse. In this pathbreaking book that will define this new age of "hypercompetition," Richard D'Aveni reveals how competitive moves and countermoves escalate with such ferocity today that the traditional sources of competitive advantage can no longer be sustained. To compete in this dynamic environment, D'Aveni argues that a company must fundamentally shift its strategic focus. He constructs a brilliant operational model that shows how firms move up "escalation ladders" as advantage is continually created, eroded, destroyed, and recreated through strategic maneuvering in four arenas of competition. Using this "Four Arena" analysis, D'Aveni explains how competitors engage in a struggle for control by seeking leadership in the arenas of "price and quality," "timing and know-how," "stronghold creation/invasion," and "deep pockets." Winners set the pace in each of these four competitive battlegrounds. Using hundreds of detailed examples from hypercompetitive industries such as computers, software, automobiles, airlines, pharmaceuticals, toys and soft drinks, D'Avenie demonstrates how hypercompetitive firms succeed in dynamic markets by disrupting the status quo and creating a continuous series of temporary advantages. They seize the initiative, D'Aveni explains, by employing a set of strategies he calls the "New 7-S's" Superior Stakeholder Satisfaction, Strategic Soothsaying, Speed, Surprise, Shifting the Rules of Competition, Signaling Strategic Intent, and Simultaneous and Sequential Thrusts. Paradoxically, firms must destroy their competitive advantages to gain advantage, D'Aveni shows. Long-term success depends not on sustaining an advantage through a static, long-term strategy, but instead on formulating a dynamic strategy for the creating, destruction, and recreation of short-term advantages. America must embrace the new reality of hypercompetition, D'Aveni concludes in a compelling analysis of the potential chilling effect of American antitrust laws on competitiveness. This masterful book, essentially an operating manual of strategy and tactics for a new era, will be required reading for managers, planners, consultants, academics, and students of hypercompetitive industries.
Author: Daniel Vogel
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This study investigates whether a significant difference in abnormal returns to shareholders of acquiring companies during and between merger waves exists. The study of 292 acquirers in very large U.S. domestic public transactions between 1990 and 2000 shows that abnormal returns are significantly lower in the merger wave than in periods of low mergers and acquisitions activity. This phenomenon holds true even when NASDAQ-listed companies are excluded and subsamples by method of payment compared. Stock paid transactions clearly perform worse than transactions paid with cash or a combination of payment methods. No significant difference has been found between the post-transaction abnormal returns of single acquirers and companies that make many acquisitions. Furthermore, it can be shown that over the two years following the transaction announcement, acquiring shareholders face ever decreasing abnormal returns raising the question as to whether the stock market is capable of fully assessing the possible gains and losses from those transactions at the time of the transaction announcement. Many behavioral theories are supported by the results of this study, while the neoclassical theory fails to explain the negative cumulative average abnormal returns and reverse trends observable after the transaction announcement.
Author: Sydney Finkelstein
Publisher: Emerald Group Publishing
ISBN: 1781904596
Category : Business & Economics
Languages : en
Pages : 248
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Book Description
Advances in Mergers and Acquisitions offers a unique perspective that will help scholars think about mergers and acquisitions in new ways, building our knowledge base on this critical topic.
Author: Jinghua Yan
Publisher:
ISBN:
Category :
Languages : en
Pages : 56
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Book Description
This paper presents a model that incorporates product market competition into the standard neoclassical framework. The model explains why value-maximizing firms conduct mergers that appear to lower shareholder value. In a Cournot setting, the model demonstrates a prisoners' dilemma for merging firms in a merger wave. Consistent with the model's implications, the paper empirically documents that horizontal mergers are followed by substantially worse performance when they occur during waves. Moreover, further empirical tests show that the empirical relation between performance and merger waves is independent of the method of payment and increasing in the acquirer's managerial ownership. These findings are difficult to reconcile with alternative interpretations from existing theories.
Author: Ran Duchin
Publisher:
ISBN:
Category :
Languages : en
Pages : 50
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Book Description
We show that acquisitions initiated during periods of high merger activity (ldquo;merger wavesrdquo;) are accompanied by poorer quality of analysts' forecasts, greater uncertainty, and weaker CEO turnover-performance sensitivity. These conditions imply reduced monitoring and lower penalties for initiating inefficient mergers. Therefore, merger waves may foster agency-driven behavior, which, along with managerial herding, could lead to worse mergers. Consistent with this hypothesis, we find that the average long-term performance of acquisitions initiated during merger waves is significantly worse. We also find that corporate governance of in-wave acquirers is weaker, suggesting that agency problems may be present in merger wave acquisitions.
Author: Dr. Othmar M. Lehner
Publisher: ACRN Publishing House
ISBN: 3950351817
Category : Business & Economics
Languages : en
Pages : 575
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Book Description
Proceedings of the 14th FRAP Finance, Risk and Accounting Perspectives conference taking place in Cambridge UK.
