Do mega-mergers create value? The acquisition experience and mega-deal outcomes

Hu, N., Li, L., Li, H. and Wang, X. (2020) Do mega-mergers create value? The acquisition experience and mega-deal outcomes. Journal of Empirical Finance, 55, pp. 119-142. (doi: 10.1016/j.jempfin.2019.11.004)

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Abstract

Existing literature shows that mega-M&A deals valued over $500mil end up destroying the shareholder value of acquirers on a significant scale. Our paper considers mega-deal as a dependent event and examines the role of acquirer’s previous acquisition experience playing in the outcome of mega-deals. We find that mega-deals conducted by firms with a high level of acquisition experience, i.e. a firm completed at least 12 transactions before, are more likely to be completed. In addition, more experienced acquirers of mega-deals generate positive abnormal stock returns for shareholders in both short-run and long-run, with a dollar value gain of $50.6 million around deal announcement. We also find that more experienced acquirers are better at managing the post-acquisition integration process and enjoy a significant improvement in operating performance.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Hu, Dr Nan
Authors: Hu, N., Li, L., Li, H., and Wang, X.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Journal of Empirical Finance
Publisher:Elsevier
ISSN:0927-5398
ISSN (Online):1879-1727
Published Online:14 November 2019
Copyright Holders:Copyright © 2019 Elsevier B.V.
First Published:First published in Journal of Empirical Finance 55: 119-142
Publisher Policy:Reproduced in accordance with the publisher copyright policy

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