Skip to main content

LUP Student Papers

LUND UNIVERSITY LIBRARIES

The impact of M&A on shareholders’ Value; Determinants of the acquirer value creation; Empirical evidence from the Swedish Market.

Mousa, Badi and Restum, Hussam LU (2020) BUSN79 20201
Department of Business Administration
Abstract
The purpose of this thesis is to investigate the impact of M&A announcement on the acquirer shareholders' value in the Swedish market. We further aim to find the determinants behind these changes in the acquirer stock prices. The theory of this study is based on previous research in the area of M&A‟s and the related theories in the literature such as the Agency theory, The efficient market theory, Hubris theory, overpayment theory, information asymmetry theory, Cash flow theory, and tax theory. The Cumulative average abnormal returns in the Swedish market (CAAR) during the period 2010-2020 are positive, and driven by: the target company management performance, the method of payment, the target company capital structure, the deal premium... (More)
The purpose of this thesis is to investigate the impact of M&A announcement on the acquirer shareholders' value in the Swedish market. We further aim to find the determinants behind these changes in the acquirer stock prices. The theory of this study is based on previous research in the area of M&A‟s and the related theories in the literature such as the Agency theory, The efficient market theory, Hubris theory, overpayment theory, information asymmetry theory, Cash flow theory, and tax theory. The Cumulative average abnormal returns in the Swedish market (CAAR) during the period 2010-2020 are positive, and driven by: the target company management performance, the method of payment, the target company capital structure, the deal premium paid, and the acquirer Cash flow. M&A in the Swedish market between 2010-2020 has created Cumulative Average abnormal returns (CAARs) of approximately 9% to the acquirer firms. We have found that the target company management performance has a positive impact on CAARs, While Cash only payments have a negative effect. We have also found a negative relationship between the acquirer cash flows and CAARs, additionally, we conducted that target companies with a high leverage ratio have a negative impact on the acquirer firm CAARs. Finally, we have found a negative relationship between the deal premium paid and the acquirer CAARs. (Less)
Please use this url to cite or link to this publication:
author
Mousa, Badi and Restum, Hussam LU
supervisor
organization
course
BUSN79 20201
year
type
H1 - Master's Degree (One Year)
subject
keywords
Merger & acquisition (M&A), Cumulative abnormal returns (CAR), Value creation, Event study, Swedish market.
language
English
id
9014580
date added to LUP
2020-08-21 14:09:55
date last changed
2020-08-21 14:09:55
@misc{9014580,
  abstract     = {{The purpose of this thesis is to investigate the impact of M&A announcement on the acquirer shareholders' value in the Swedish market. We further aim to find the determinants behind these changes in the acquirer stock prices. The theory of this study is based on previous research in the area of M&A‟s and the related theories in the literature such as the Agency theory, The efficient market theory, Hubris theory, overpayment theory, information asymmetry theory, Cash flow theory, and tax theory. The Cumulative average abnormal returns in the Swedish market (CAAR) during the period 2010-2020 are positive, and driven by: the target company management performance, the method of payment, the target company capital structure, the deal premium paid, and the acquirer Cash flow. M&A in the Swedish market between 2010-2020 has created Cumulative Average abnormal returns (CAARs) of approximately 9% to the acquirer firms. We have found that the target company management performance has a positive impact on CAARs, While Cash only payments have a negative effect. We have also found a negative relationship between the acquirer cash flows and CAARs, additionally, we conducted that target companies with a high leverage ratio have a negative impact on the acquirer firm CAARs. Finally, we have found a negative relationship between the deal premium paid and the acquirer CAARs.}},
  author       = {{Mousa, Badi and Restum, Hussam}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The impact of M&A on shareholders’ Value; Determinants of the acquirer value creation; Empirical evidence from the Swedish Market.}},
  year         = {{2020}},
}