Do Acquiring Firms Gain from Takeovers? Empirical evidence from the Norwegian stock market with a focus on the payment method
Master thesis
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Date
2019Metadata
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- Master of Science [1806]
Abstract
The objective of this thesis is to examine the economic effect when announcing a
takeover in the Norwegian stock market. The research investigates acquisition
announcements between 2009 – 2018, where the goal is to see the impact that the
payment method has on the abnormal returns. This research has applied event
study methodology, finding that the acquiring firm on average experience a
negative abnormal announcement return of -1,38%. However, when checking for
cash and stock as the payment method, the research finds that cash has a positive
significant abnormal return of 2,34% and stock have a negative significant
abnormal return of -3,01%. Hence, we find evidence of higher abnormal return
when using cash as the method-of-payment. Furthermore, cash is robust and holds
when controlling for different measures of payment methods, deal characteristics
and firm characteristics. In conclusion, the acquiring firm creates value for its
shareholders under certain conditions.
Description
Masteroppgave(MSc) in Master of Science in Business, Finance - Handelshøyskolen BI, 2019