AN ANALYSIS OF THE PERFORMANCE OF MERGERS AND ACQUISITIONS IN BOOM AND BUST PERIODS (CASESTUDY: UNITED KINGDOM)
Previous studies have confirmed significant positive returns to shareholders of target firm. Varied results have been reported for acquirers (positive, negative and zero returns). Several variables such as method of payment, type of acquisition (conglomerate and non-conglomerate mergers), managers&#...
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| Format: | Dissertation (University of Nottingham only) |
| Language: | English |
| Published: |
2006
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| Online Access: | https://eprints.nottingham.ac.uk/20788/ |
| Summary: | Previous studies have confirmed significant positive returns to shareholders of target firm. Varied results have been reported for acquirers (positive, negative and zero returns). Several variables such as method of payment, type of acquisition (conglomerate and non-conglomerate mergers), managers' stake in the acquirers firm, have been used to explain the varied result to acquirers. Previous studies have examined the performance of acquirers over several years comprising both boom and burst periods. Similar studies carried out in different time periods have yielded contrasting results.
This study seeks to analyse the effect of the boom and burst stock market periods on the performance of acquirers. The result from study reveals negative returns to acquirers in boom periods and positive returns in burst periods. The study also considered the effect method of payment and the type of acquisition (conglomerate and non-conglomerate mergers) in each of the periods. Cash-financed deals in the burst period and stock-financed deals in the boom period appears to yield positive returns, while cash-financed deals in the boom period and stock-financed deals in the burst periods appear to yield negative and zero returns respectively. |
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