Bidders earn nothing in acquisition deal”– does it apply in an emerging market?
(2021) NEKN02 20211Department of Economics
- Abstract
- This paper investigates whether the convention about wealth distribution in an M&A deal holds true for Acquirers of TMT-sector companies in Russia. The convention can be formulated as: In an M&A deal, bidders earn nothing, while targets enjoy wealth increase on average. The wealth effect on acquirers is measured by means of event study approach. The central tendencies of abnormal return and cumulative abnormal return for 11 days observation window are obtained from stock data of 21 companies that engaged in 116 M&A deal in total. The time frame considered is limited to years 2010-2021. Additionally, implications of expectation treadmill on frequent and non-frequent acquirers are investigated by means of the same method applied to two... (More)
- This paper investigates whether the convention about wealth distribution in an M&A deal holds true for Acquirers of TMT-sector companies in Russia. The convention can be formulated as: In an M&A deal, bidders earn nothing, while targets enjoy wealth increase on average. The wealth effect on acquirers is measured by means of event study approach. The central tendencies of abnormal return and cumulative abnormal return for 11 days observation window are obtained from stock data of 21 companies that engaged in 116 M&A deal in total. The time frame considered is limited to years 2010-2021. Additionally, implications of expectation treadmill on frequent and non-frequent acquirers are investigated by means of the same method applied to two separate samples of companies. The results show that the convention holds true for the mixed sample of companies. The results are different for non-frequent acquirers sample and thus expectation treadmill is found to affect the frequent acquirers. The paper also highlights that companies in the sample experienced a range of returns stretching from significantly negative to significantly positive value. In it thereby noticed that despite the convention, an individual M&A deal can be value-creating as well as severely value destroying. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9064102
- author
- Peterson, Mark LU
- supervisor
- organization
- course
- NEKN02 20211
- year
- 2021
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Event study, convention, TMT-sector, Abnormal return
- language
- English
- id
- 9064102
- date added to LUP
- 2021-10-26 08:18:03
- date last changed
- 2021-10-26 08:18:03
@misc{9064102,
abstract = {{This paper investigates whether the convention about wealth distribution in an M&A deal holds true for Acquirers of TMT-sector companies in Russia. The convention can be formulated as: In an M&A deal, bidders earn nothing, while targets enjoy wealth increase on average. The wealth effect on acquirers is measured by means of event study approach. The central tendencies of abnormal return and cumulative abnormal return for 11 days observation window are obtained from stock data of 21 companies that engaged in 116 M&A deal in total. The time frame considered is limited to years 2010-2021. Additionally, implications of expectation treadmill on frequent and non-frequent acquirers are investigated by means of the same method applied to two separate samples of companies. The results show that the convention holds true for the mixed sample of companies. The results are different for non-frequent acquirers sample and thus expectation treadmill is found to affect the frequent acquirers. The paper also highlights that companies in the sample experienced a range of returns stretching from significantly negative to significantly positive value. In it thereby noticed that despite the convention, an individual M&A deal can be value-creating as well as severely value destroying.}},
author = {{Peterson, Mark}},
language = {{eng}},
note = {{Student Paper}},
title = {{Bidders earn nothing in acquisition deal”– does it apply in an emerging market?}},
year = {{2021}},
}