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Profitability of firms after M&As in the UK, France and Germany : an event study approach.

Luo, Lei. 2007. Profitability of firms after M&As in the UK, France and Germany : an event study approach. PhD Thesis, Cardiff University.

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Abstract

This thesis examines share price performance of firms after mergers and acquisitions (M&As) in some major EU M&A markets. In particular, they are the UK, French and German M&A markets. The thesis performs a full empirical survey covering not only both the short and long run share price performance, but also both domestic and cross-border acquisitions. In addition, the thesis pays attention to the long run performance of the acquirers of private target firms. Based on a sample in the three selected M&A markets over the period 1992-2003, the thesis shows that, in the short run, target firm shareholders receive on average positive excess returns while acquirers receive on average zero or slightly positive excess returns. This is in line with other studies in this area. In addition, amongst other things, UK target firm shareholders receive substantially higher excess returns than continental-EU target firm shareholders. In the case of the UK sample, there is some evidence that in the long run domestic acquirers on average experience negative buy-and-hold-abnormal-returns and cross-border acquirers are likely to experience insignificant buy-and-hold-abnormal-returns. When I gather all types of UK acquirers together, the evidence shows that overall acquisitions by UK acquirers yield negative profits in the long run. The thesis also shows that UK overlapping acquirers outperform UK non-overlapping acquirers in certain circumstances. On the other hand, the results of the French sample in general suggest no under- or over-performance in the long run. In Germany, there is some evidence for under-performance in the long run. The thesis reveals that, in the long run, UK acquirers of cross-border M&As experience higher share price performance than those of domestic M&As. Other factors, such as means of payment, tender offer, market-to-book-value, leverage ratio, and market value are found to be important determinants for the short and/or the long run share price performance. Overall, this thesis performs a comprehensive empirical study to examine the profitability of firms after M&As and explore the determinants of the profitability.

Item Type: Thesis (PhD)
Status: Unpublished
Schools: Business (Including Economics)
Subjects: H Social Sciences > HF Commerce
ISBN: 9781303174674
Date of First Compliant Deposit: 30 March 2016
Last Modified: 12 Feb 2016 23:12
URI: http://orca.cf.ac.uk/id/eprint/54295

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