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Value Creation or Value Destruction? An empirical study of Nordic firms acquiring targets within the BRIC countries

Hussein, Aram LU and Gadelius, Wilhelm (2012) BUSN89 20121
Department of Business Administration
Abstract
This paper studies whether Nordic firms can improve their performance by acquiring firms within the BRIC countries. The BRIC countries has undergone several structural changes and experienced a rapid economic growth during the recent years, which has gained them a lot of attention from the rest of the economical world. However, few scholars have studied acquisition conducted within the BRIC countries, leaving it an unexplored area within the otherwise well studied M&A field. Hence, this paper intends to contribute to the academic literature by filling this gap. Therefore, the influence of the transaction on the bidders performances have been measured by implementing two event studies. First, the CAR was measured for 125 acquisitions made... (More)
This paper studies whether Nordic firms can improve their performance by acquiring firms within the BRIC countries. The BRIC countries has undergone several structural changes and experienced a rapid economic growth during the recent years, which has gained them a lot of attention from the rest of the economical world. However, few scholars have studied acquisition conducted within the BRIC countries, leaving it an unexplored area within the otherwise well studied M&A field. Hence, this paper intends to contribute to the academic literature by filling this gap. Therefore, the influence of the transaction on the bidders performances have been measured by implementing two event studies. First, the CAR was measured for 125 acquisitions made by Nordic firms within the BRIC countries between 1995 and 2011, during a three days event window [-1, 1]. Second, the AOP was measured for 67 acquisitions undertaken by Nordic bidders during the period 1995-2008, over a 5 years event window [-1, 3]. The results was two folded, an improvement of 1,33% was found when measuring the performance as CAR, while the AOP showed a performance loss of -5,13%. Moreover, it was found that CAR was positively affected by the GDP per capita within the target country and negatively influenced by the bidders’ size and MTB ratio, while the AOP was found to increase with the bidders’ amount of intangible assets. (Less)
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author
Hussein, Aram LU and Gadelius, Wilhelm
supervisor
organization
course
BUSN89 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Acquisitions, cross-border, BRIC, Cumulative Abnormal Return (CAR), Abnormal Operating Performance (AOP), long run, short run, performance, event study.
language
English
id
2688516
date added to LUP
2012-06-25 11:06:05
date last changed
2012-06-25 11:06:05
@misc{2688516,
  abstract     = {This paper studies whether Nordic firms can improve their performance by acquiring firms within the BRIC countries. The BRIC countries has undergone several structural changes and experienced a rapid economic growth during the recent years, which has gained them a lot of attention from the rest of the economical world. However, few scholars have studied acquisition conducted within the BRIC countries, leaving it an unexplored area within the otherwise well studied M&A field. Hence, this paper intends to contribute to the academic literature by filling this gap. Therefore, the influence of the transaction on the bidders performances have been measured by implementing two event studies. First, the CAR was measured for 125 acquisitions made by Nordic firms within the BRIC countries between 1995 and 2011, during a three days event window [-1, 1]. Second, the AOP was measured for 67 acquisitions undertaken by Nordic bidders during the period 1995-2008, over a 5 years event window [-1, 3]. The results was two folded, an improvement of 1,33% was found when measuring the performance as CAR, while the AOP showed a performance loss of -5,13%. Moreover, it was found that CAR was positively affected by the GDP per capita within the target country and negatively influenced by the bidders’ size and MTB ratio, while the AOP was found to increase with the bidders’ amount of intangible assets.},
  author       = {Hussein, Aram and Gadelius, Wilhelm},
  keyword      = {Acquisitions,cross-border,BRIC,Cumulative Abnormal Return (CAR),Abnormal Operating Performance (AOP),long run,short run,performance,event study.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Value Creation or Value Destruction? An empirical study of Nordic firms acquiring targets within the BRIC countries},
  year         = {2012},
}