Pricing Difficulties in Mergers & Acquisitions – Public versus Private target
(2014) BUSN89 20141Department of Business Administration
- Abstract
- With the intention to provide new evidence valid for the Scandinavian market the thesis aims to; (I) examine the announcement effect for acquiring companies, where the emphasis lies on the difference between acquiring Public targets compared to Private targets, and (II) investigate the relation between abnormal returns and variables found significant in previous research.
The concept of mergers and acquisitions is briefly introduced followed by relevant theories offering explanations to the occurrence of the announcement effect. The role of the management is discussed before presenting previous research within the field of announcement effect. The chapter ends with a discussion regarding market efficiency, impact of information and the... (More) - With the intention to provide new evidence valid for the Scandinavian market the thesis aims to; (I) examine the announcement effect for acquiring companies, where the emphasis lies on the difference between acquiring Public targets compared to Private targets, and (II) investigate the relation between abnormal returns and variables found significant in previous research.
The concept of mergers and acquisitions is briefly introduced followed by relevant theories offering explanations to the occurrence of the announcement effect. The role of the management is discussed before presenting previous research within the field of announcement effect. The chapter ends with a discussion regarding market efficiency, impact of information and the private firm discount.
A quantitative approach is used where an Event study is conducted to determine the announcement effect. T-tests are performed to ensure statistical significance. Multiple linear regression models examine the effect of Relative size, Deal size, Form, Serial acquirer, Implied premium and target public status on abnormal returns.
The data sample consists of Scandinavian public firms (listed on stock exchanges in Sweden, Norway, Finland and Denmark) bidding for either public or private targets between 2004-01-01 and 2014-01-01.
Statistical significant evidence of positive abnormal returns is found for the total sample. Furthermore the results indicate that acquisitions of privately held companies outperform deals for publicly traded firms, supporting the private firm discount. The relative size is found to have a generally positive impact on acquisitions, while deal size and premium is found to have a negative relation in acquisitions of public targets. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/4450663
- author
- Petersson, Paula LU and Szabo, Eric
- supervisor
- organization
- course
- BUSN89 20141
- year
- 2014
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Mergers, Acquisitions, Announcement Effect, Event Study, Private firm discount
- language
- English
- id
- 4450663
- date added to LUP
- 2014-11-03 13:43:01
- date last changed
- 2014-11-03 13:43:01
@misc{4450663,
abstract = {{With the intention to provide new evidence valid for the Scandinavian market the thesis aims to; (I) examine the announcement effect for acquiring companies, where the emphasis lies on the difference between acquiring Public targets compared to Private targets, and (II) investigate the relation between abnormal returns and variables found significant in previous research.
The concept of mergers and acquisitions is briefly introduced followed by relevant theories offering explanations to the occurrence of the announcement effect. The role of the management is discussed before presenting previous research within the field of announcement effect. The chapter ends with a discussion regarding market efficiency, impact of information and the private firm discount.
A quantitative approach is used where an Event study is conducted to determine the announcement effect. T-tests are performed to ensure statistical significance. Multiple linear regression models examine the effect of Relative size, Deal size, Form, Serial acquirer, Implied premium and target public status on abnormal returns.
The data sample consists of Scandinavian public firms (listed on stock exchanges in Sweden, Norway, Finland and Denmark) bidding for either public or private targets between 2004-01-01 and 2014-01-01.
Statistical significant evidence of positive abnormal returns is found for the total sample. Furthermore the results indicate that acquisitions of privately held companies outperform deals for publicly traded firms, supporting the private firm discount. The relative size is found to have a generally positive impact on acquisitions, while deal size and premium is found to have a negative relation in acquisitions of public targets.}},
author = {{Petersson, Paula and Szabo, Eric}},
language = {{eng}},
note = {{Student Paper}},
title = {{Pricing Difficulties in Mergers & Acquisitions – Public versus Private target}},
year = {{2014}},
}