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How M&A Experience Affects Firms’ Timing and Performance During Waves: A Study on M&A Decision Making Between Active and Inactive Acquirers During the Sixth Great Merger Wave

Whittall, Shiloh LU and Andersson, Axel LU (2017) BUSN79 20171
Department of Business Administration
Abstract
Purpose: This thesis delves into whether acquisition experience is both a valid indicator of increased acquirer returns and leads to participating at certain points during an M&A wave through examining the differences between active and inactive acquirers. This study seeks to provide further understanding of acquisitions during M&A waves with particular interest focused on domestic transactions in the U.S. during the sixth great merger wave.

Methodology: An event study following the market model is used to calculate abnormal and cumulative abnormal returns (CARs) for each acquisition. The results from the event study are then used as the dependent variables.

Theory: This thesis is influenced by two key theories of M&A. The first... (More)
Purpose: This thesis delves into whether acquisition experience is both a valid indicator of increased acquirer returns and leads to participating at certain points during an M&A wave through examining the differences between active and inactive acquirers. This study seeks to provide further understanding of acquisitions during M&A waves with particular interest focused on domestic transactions in the U.S. during the sixth great merger wave.

Methodology: An event study following the market model is used to calculate abnormal and cumulative abnormal returns (CARs) for each acquisition. The results from the event study are then used as the dependent variables.

Theory: This thesis is influenced by two key theories of M&A. The first includes the motives and causes driving acquisitions and merger waves. Second, how acquirer experience effects the timing, performance and returns when undergoing acquisitions in M&A waves.

Conclusions: We find significant negative returns for inactive acquirers regardless of what stage in the wave they participated in while active acquirers reported insignificant positive returns. These results indicate that, on average, experienced acquirers are more likely to create value for shareholders whereas inexperienced acquirers destroy value. The findings both support and test the extent theories indicating further research is still warranted for how M&A experience effects acquisition decision making. (Less)
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author
Whittall, Shiloh LU and Andersson, Axel LU
supervisor
organization
course
BUSN79 20171
year
type
H1 - Master's Degree (One Year)
subject
language
English
id
8911908
date added to LUP
2017-07-05 16:20:05
date last changed
2017-07-05 16:20:05
@misc{8911908,
  abstract     = {Purpose:	This thesis delves into whether acquisition experience is both a valid indicator of increased acquirer returns and leads to participating at certain points during an M&A wave through examining the differences between active and inactive acquirers. This study seeks to provide further understanding of acquisitions during M&A waves with particular interest focused on domestic transactions in the U.S. during the sixth great merger wave.

Methodology:	An event study following the market model is used to calculate abnormal and cumulative abnormal returns (CARs) for each acquisition. The results from the event study are then used as the dependent variables. 

Theory:	This thesis is influenced by two key theories of M&A. The first includes the motives and causes driving acquisitions and merger waves. Second, how acquirer experience effects the timing, performance and returns when undergoing acquisitions in M&A waves.

Conclusions:	We find significant negative returns for inactive acquirers regardless of what stage in the wave they participated in while active acquirers reported insignificant positive returns. These results indicate that, on average, experienced acquirers are more likely to create value for shareholders whereas inexperienced acquirers destroy value. The findings both support and test the extent theories indicating further research is still warranted for how M&A experience effects acquisition decision making.},
  author       = {Whittall, Shiloh and Andersson, Axel},
  language     = {eng},
  note         = {Student Paper},
  title        = {How M&A Experience Affects Firms’ Timing and Performance During Waves: A Study on M&A Decision Making Between Active and Inactive Acquirers During the Sixth Great Merger Wave},
  year         = {2017},
}