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Intäkts- vs. kostnadssynergimotiv - Vad skapar mest värde för uppköpande företag vid M&A?

Hansson, Niklas LU and Wilsson, Roger (2012) FEKN90 20121
Department of Business Administration
Abstract
Purpose: The purpose of this study is to investigate the value creation for acquiring firms resulting from an M&A depending on which motive lies behind, revenue and/or cost synergies.
Methodology: We have conducted a quantitative study including a quantitative content analysis of press releases to identify synergy motives. The event study methodology and the market model have been used to calculate abnormal return for acquiring companies. The abnormal returns have been analysed with a multiple regression model.
Theoretical perspectives: The study covers theories concerning Mergers and Acquisitions, M&A, and the motives related to it. Agency problems, hubris hypothesis and synergies are named in the literature as the most important... (More)
Purpose: The purpose of this study is to investigate the value creation for acquiring firms resulting from an M&A depending on which motive lies behind, revenue and/or cost synergies.
Methodology: We have conducted a quantitative study including a quantitative content analysis of press releases to identify synergy motives. The event study methodology and the market model have been used to calculate abnormal return for acquiring companies. The abnormal returns have been analysed with a multiple regression model.
Theoretical perspectives: The study covers theories concerning Mergers and Acquisitions, M&A, and the motives related to it. Agency problems, hubris hypothesis and synergies are named in the literature as the most important factors when studying value creation of M&A. Furthermore, a thorough review of the empirical studies and their findings within the field of M&A is conducted.
Empirical foundation: A sample containing 192 listed firms on the Swedish market during 2005- 2011.
Conclusion: Surprisingly, our study shows that M&A containing a combination of both revenue and cost synergy motives yield a negative market response. These transactions are big which leads to an increased uncertainty in terms of realization of the outspoken synergies. Managers that strife for both revenue and cost synergies when conducting an M&A are in wider sense driven by hubris. They misjudge the high risk associated with the realization of the synergies because of their hubris and therefore destroy value for their shareholders. Furthermore, our study indicates that cost synergy motives on average create more value than revenue synergy motives. The reason for this finding is that cost synergies are easier to estimate and realize which gives the acquiring company a better chance to make a correct evaluation of the potential value that can be created through the cost reductions when conducting an M&A. (Less)
Please use this url to cite or link to this publication:
author
Hansson, Niklas LU and Wilsson, Roger
supervisor
organization
course
FEKN90 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Cost synergies, revenue synergies, M&A, motives, press releases.
language
Swedish
id
2542337
date added to LUP
2012-07-02 11:41:55
date last changed
2012-07-02 11:41:55
@misc{2542337,
  abstract     = {Purpose: 	The purpose of this study is to investigate the value creation for acquiring firms resulting from an M&A depending on which motive lies behind, revenue and/or cost synergies.
Methodology: 	We have conducted a quantitative study including a quantitative content analysis of press releases to identify synergy motives. The event study methodology and the market model have been used to calculate abnormal return for acquiring companies. The abnormal returns have been analysed with a multiple regression model.
Theoretical perspectives: 	The study covers theories concerning Mergers and Acquisitions, M&A, and the motives related to it. Agency problems, hubris hypothesis and synergies are named in the literature as the most important factors when studying value creation of M&A. Furthermore, a thorough review of the empirical studies and their findings within the field of M&A is conducted.
Empirical foundation: 	A sample containing 192 listed firms on the Swedish market during 2005- 2011. 
Conclusion: 	Surprisingly, our study shows that M&A containing a combination of both revenue and cost synergy motives yield a negative market response. These transactions are big which leads to an increased uncertainty in terms of realization of the outspoken synergies. Managers that strife for both revenue and cost synergies when conducting an M&A are in wider sense driven by hubris. They misjudge the high risk associated with the realization of the synergies because of their hubris and therefore destroy value for their shareholders. Furthermore, our study indicates that cost synergy motives on average create more value than revenue synergy motives. The reason for this finding is that cost synergies are easier to estimate and realize which gives the acquiring company a better chance to make a correct evaluation of the potential value that can be created through the cost reductions when conducting an M&A.},
  author       = {Hansson, Niklas and Wilsson, Roger},
  keyword      = {Cost synergies,revenue synergies,M&A,motives,press releases.},
  language     = {swe},
  note         = {Student Paper},
  title        = {Intäkts- vs. kostnadssynergimotiv - Vad skapar mest värde för uppköpande företag vid M&A?},
  year         = {2012},
}