|dc.description.abstract||During the last two decades, mergers and acquisitions (M&As) grew to become
an attractive business strategy for companies to engage in, aiming to benefit from
revenue enhancement, cost reduction, tax gains or reduced capital requirements.
With such transactions gaining popularity, many economists decided to assess the
pre-transaction and actual post-transaction gains for both parties’ shareholders.
While most authors focused on short term value creation, fewer also considered
to research several years long post-transaction periods. According to existing
literature, described in section 2, there is a general consensus that M&A activity
does not provide same payoffs for the involved parties. More specifically, authors
agree that target shareholders are in most cases rewarded with increase in their
stock price in the period around the announcement date, while acquirers encounter
wealth destruction through negative returns in both short- and long-term period.
Nevertheless, this might not necessarily be a general rule for all acquirers and
could rather be dependent on specific industry, deal or bidder characteristic.
Therefore, the primary objective of this research is to analyze, understand and
explain the effects of different scenario M&A deals on target and bidder’s
shareholders, which we measure in abnormal returns. Our focus lies in the less
researched acquirer’s post event performance and its possible industry effect,
since according to results of Schiereck’s study (2008), this might contradict the
general theory. In general, we aim to reach a conclusion weather there is, on
average, wealth created during M&A transactions, weather the benefits are only
one sided, and if the wealth is created only in the short-run. We conduct our
research on a sample of merger and acquisition transactions, which were realized
in the United States between years 1997 and 2012.
The remainder of the paper is organized as follows: Section 2 presents the theory
framework and literature review, Section 3 lays out the data and methodology
employed in the analysis, Section 4 describes results and provides a discussion,
and lastly, section 5 concludes the research with a summary and final thoughts.||nb_NO