The impact of M&A announcements on acquiring and target firm's shareholders

Abstract

This thesis employs an event study analysis to examine the impact of 243 Norwegian mergers and acquisitions (M&A) announcements on abnormal shareholder returns across short-term and long-term event windows. It also investigates potential information leakage through pre-announcement returns and considers the influence of payment structure in the transaction. The research further differentiates deals pre- and post-COVID-19. Findings indicate short-term wealth gains for both acquirer and target shareholders, with long-term benefits accruing only to the target. No evidence of information leakage is found. The most effective payment method for acquirers is found to be a combination of cash and stock, while targets derive the greatest benefit from pure cash payments. Differences emerge in the pre-and post-pandemic periods, with acquirers benefiting more pre-pandemic and targets post-pandemic. Thus, investors are urged to closely monitor M&A announcements.