University of Twente Student Theses


Do the Announcements of Cross-border Mergers and Acquisitions Increase Short-term Stock-prices for Acquiring Firms? An Analysis of Western European Firms

Breukink, M.J. (2019) Do the Announcements of Cross-border Mergers and Acquisitions Increase Short-term Stock-prices for Acquiring Firms? An Analysis of Western European Firms.

[img] PDF
Abstract:The aim of this paper is to re-explore and expand knowledge on cross-border M&A announcement short-term performance effects. Applying multiple theories this paper gives a better understanding of the short-term stock market’s reaction from an acquirer point of view to announcements of cross-border mergers & acquisitions involving West European firms. In this research a sample of 179 European firms’ cross-border M&As are analysed. The focus lies on a different range of factors influencing the (different) market reactions. Besides, more intensive studied factors, such as, payment methods, this study explicitly evaluates the impact of country governance quality in host countries. Therefor this research provides new insights in linking different aspects of country governance to short-term M&A announcement stock market performance. Discussing the main findings this study shows that, in general Western Europe acquirers experience significant positive short-term stock market reactions around the time of cross-border M&A announcements. Moreover, this study finds that, against the expectations gathered through prior research, political stability and governance quality do not have a direct influence on the short-term market reactions around the time of the announcement date. However, I do find significant negative relationships between a host target country’s rule of law, regulatory quality and M&A announcement short-term performance, therefore indicating those two governance indicators in particular should be investigated in further research. Moreover, in contrast with the literature findings this research does not report a significant relationship between the payment method and short-term M&A announcement market reactions. The aforementioned shows that this study contributes in deepening the knowledge of the performance implications of European cross-border M&As by accentuating under what specific conditions cross-border M&As do or do not create value for Western European acquirers. Additionally, this study shows, by utilizing two methods for specifying normal returns namely the market model and the mean adjusted model that, that in line with Brown & Warner’s (1980) findings, the mean adjusted model yield similar results than results from more complex approaches for specifying normal returns models such as the market model.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:
Export this item as:BibTeX
HTML Citation
Reference Manager


Repository Staff Only: item control page