Two sides of the same coin?
(2015) FEKN90 20151Department of Business Administration
- Abstract
- Purpose: This study’s purpose is to study the long term effects of M&A and to examine whether stock price is the only determinant of post-merger performance or if operating performance can be used as an additional determinant. How underlying variables impact these measures are also part of this study´s purpose.
Methodology: A quantitative approach is used where two event studies are conducted to determine the long term effects of Mergers and Acquisitions. To study the stock performance a buy and hold abnormal return model with benchmark firms are used. The accounting figures will be measured by relating their development to an industry benchmark. To ensure the statistical T-tests are used in order to ensure statistical significance.... (More) - Purpose: This study’s purpose is to study the long term effects of M&A and to examine whether stock price is the only determinant of post-merger performance or if operating performance can be used as an additional determinant. How underlying variables impact these measures are also part of this study´s purpose.
Methodology: A quantitative approach is used where two event studies are conducted to determine the long term effects of Mergers and Acquisitions. To study the stock performance a buy and hold abnormal return model with benchmark firms are used. The accounting figures will be measured by relating their development to an industry benchmark. To ensure the statistical T-tests are used in order to ensure statistical significance. Furthermore, multiple linear regressions will be used to examine how performance is affected by our set of variables.
Theoretical framework: The theoretical framework includes a description of mergers and acquisitions and why they occur. Furthermore, the relevant theories for this study, efficient market hypothesis and information asymmetry are also presented. A review of previous research conducted on M&A:s is also conducted.
Empirical foundation: The data sample consists of 64 transactions in Sweden, Norway, Denmark and Finland between 2004-01-01 to 2012-01-01. An additional criterion includes that both the acquirer and the target needs to be public.
Conclusion: This study finds no significant results in either long term stock or long term operating performance. Furthermore the results from the correlation between the measures indicate that there are a significant linear relationship between the measures after 24 months. Variables that had a significant on at least one of the measures included relative transaction size, market-to-book ratio and industry relatedness of the target and acquirer. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/7792796
- author
- Hansson, Anton LU and Östlund, Theodor LU
- supervisor
- organization
- alternative title
- Evaluating M&A performance from two different perspectives
- course
- FEKN90 20151
- year
- 2015
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Mergers, Acquisitions, Event Study, BHAR, ROA, Operating Performance, Regression analysis
- language
- English
- id
- 7792796
- date added to LUP
- 2015-09-15 16:27:44
- date last changed
- 2015-09-15 16:27:44
@misc{7792796,
abstract = {{Purpose: This study’s purpose is to study the long term effects of M&A and to examine whether stock price is the only determinant of post-merger performance or if operating performance can be used as an additional determinant. How underlying variables impact these measures are also part of this study´s purpose.
Methodology: A quantitative approach is used where two event studies are conducted to determine the long term effects of Mergers and Acquisitions. To study the stock performance a buy and hold abnormal return model with benchmark firms are used. The accounting figures will be measured by relating their development to an industry benchmark. To ensure the statistical T-tests are used in order to ensure statistical significance. Furthermore, multiple linear regressions will be used to examine how performance is affected by our set of variables.
Theoretical framework: The theoretical framework includes a description of mergers and acquisitions and why they occur. Furthermore, the relevant theories for this study, efficient market hypothesis and information asymmetry are also presented. A review of previous research conducted on M&A:s is also conducted.
Empirical foundation: The data sample consists of 64 transactions in Sweden, Norway, Denmark and Finland between 2004-01-01 to 2012-01-01. An additional criterion includes that both the acquirer and the target needs to be public.
Conclusion: This study finds no significant results in either long term stock or long term operating performance. Furthermore the results from the correlation between the measures indicate that there are a significant linear relationship between the measures after 24 months. Variables that had a significant on at least one of the measures included relative transaction size, market-to-book ratio and industry relatedness of the target and acquirer.}},
author = {{Hansson, Anton and Östlund, Theodor}},
language = {{eng}},
note = {{Student Paper}},
title = {{Two sides of the same coin?}},
year = {{2015}},
}