Short-Term Value Creation and its Drivers in M&A Announcements: A study of Nordic acquiring firms
(2020) NEKN02 20201Department of Economics
- Abstract
- M&As are a commonly used growth strategy in the corporate world. Therefore, a considerable amount of research exists on its value-creating properties. This study's objective is to extend the existing literature by examining stock price changes searching for possible abnormal returns but also information leakage of the acquiring firms in the Nordic countries (Sweden, Denmark, Norway) over the period 2001-2019. Moreover, this study will examine what causes this phenomenon. For these purposes, this study adopts an event study as well as an OLS regression. The results from the event study demonstrate positive abnormal returns for the acquiring firms in Sweden, Denmark, and Norway, in which information leakage seems to be present in Sweden and... (More)
- M&As are a commonly used growth strategy in the corporate world. Therefore, a considerable amount of research exists on its value-creating properties. This study's objective is to extend the existing literature by examining stock price changes searching for possible abnormal returns but also information leakage of the acquiring firms in the Nordic countries (Sweden, Denmark, Norway) over the period 2001-2019. Moreover, this study will examine what causes this phenomenon. For these purposes, this study adopts an event study as well as an OLS regression. The results from the event study demonstrate positive abnormal returns for the acquiring firms in Sweden, Denmark, and Norway, in which information leakage seems to be present in Sweden and Norway. The multiple regression studying possible value drivers is accounting for the following: method of payment, the listing status of the target company, domestic versus cross-border acquisitions, deal attitude (friendly versus hostile), and lastly, industry relatedness. The findings suggest that none of the proposed factors influences short-term abnormal returns in Denmark. In Sweden, on the other hand, acquiring a listed target has a positive effect on abnormal returns, whereas, in Norway, hostile bids destroy value. In the total sample, one can observe a negative effect of cash offers on value creation. One can draw a similar conclusion for cash offers on listed targets. Moreover, equity offers for listed targets are yielding positive abnormal returns. To sum, different value-creating factors are more or less critical in the various Nordic countries. Moreover, the evidence implies that the stock markets in the Nordic region might act somewhat unexpectedly in comparison to regions extensively studied, such as the US, the UK, and Europe in general. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9021278
- author
- Andersson, Fia LU
- supervisor
- organization
- course
- NEKN02 20201
- year
- 2020
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- M&As, Nordic Countries, Short-term Value Creation, Event Study, Value Drivers
- language
- English
- id
- 9021278
- date added to LUP
- 2020-08-29 11:11:58
- date last changed
- 2020-08-29 11:11:58
@misc{9021278,
abstract = {{M&As are a commonly used growth strategy in the corporate world. Therefore, a considerable amount of research exists on its value-creating properties. This study's objective is to extend the existing literature by examining stock price changes searching for possible abnormal returns but also information leakage of the acquiring firms in the Nordic countries (Sweden, Denmark, Norway) over the period 2001-2019. Moreover, this study will examine what causes this phenomenon. For these purposes, this study adopts an event study as well as an OLS regression. The results from the event study demonstrate positive abnormal returns for the acquiring firms in Sweden, Denmark, and Norway, in which information leakage seems to be present in Sweden and Norway. The multiple regression studying possible value drivers is accounting for the following: method of payment, the listing status of the target company, domestic versus cross-border acquisitions, deal attitude (friendly versus hostile), and lastly, industry relatedness. The findings suggest that none of the proposed factors influences short-term abnormal returns in Denmark. In Sweden, on the other hand, acquiring a listed target has a positive effect on abnormal returns, whereas, in Norway, hostile bids destroy value. In the total sample, one can observe a negative effect of cash offers on value creation. One can draw a similar conclusion for cash offers on listed targets. Moreover, equity offers for listed targets are yielding positive abnormal returns. To sum, different value-creating factors are more or less critical in the various Nordic countries. Moreover, the evidence implies that the stock markets in the Nordic region might act somewhat unexpectedly in comparison to regions extensively studied, such as the US, the UK, and Europe in general.}},
author = {{Andersson, Fia}},
language = {{eng}},
note = {{Student Paper}},
title = {{Short-Term Value Creation and its Drivers in M&A Announcements: A study of Nordic acquiring firms}},
year = {{2020}},
}