The impact of single and multiple mergers and acquisitions on shareholders' wealth of UK bidder firms

Giannopoulos, George, Khansalar, Ehsan and Patel, Neel (2017) The impact of single and multiple mergers and acquisitions on shareholders' wealth of UK bidder firms. International Journal of Economics and Finance, 9(3), pp. 141-167. ISSN (print) 1916-971X

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Abstract

This study investigates the impact of takeover announcements on UK acquirer shareholders’ wealth during the period 2002-2006. More specifically, it is investigated whether the impact of single acquirers on shareholders’ wealth is significantly different from the impact of multiple acquirers. Findings suggest that acquirer shareholders experience positive abnormal returns during the announcement period. Moreover, the results indicate single acquirers consistently outperform multiple acquirers when testing for deal characteristics such as: payment method (cash or equity), target status (public or private), target location (domestic or cross crosspayment method (cash or equity), target status (public or private), target location (domestic or cross-border and industry relatedness (specification or diversification). Performance declines with sequential acquisitions due to merger programme announcement hypothesis. Successful first time acquirers suffer from hubris whilst unsuccessful first time acquirers learn from their experiences suggested by the organisation learning hypothesis but go on to suffer from hubris. Acquisitions of private firms yield significant abnormal returns whereas public acquisitions reduce the value of UK acquirers. The effect of cash and equity, domestic and foreign, related and unrelated takeovers are inconclusive for the short-term windows investigated by this study.

Item Type: Article
Research Area: Accounting and finance
Faculty, School or Research Centre: Faculty of Business and Law
Faculty of Business and Law > Kingston Business School (Accounting, Finance and Informatics) (from August 2013)
Depositing User: George Giannopoulos
Date Deposited: 24 Mar 2017 10:14
Last Modified: 05 May 2017 14:48
URI: http://eprints.kingston.ac.uk/id/eprint/37851

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