Shareholders' Wealth Around Merger and Acquisition Announcements and Financial Performance of Bidders: Evidence from SAARC Giants
Shuaib, Haroon (2022)
Shuaib, Haroon
2022
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2022052612186
https://urn.fi/URN:NBN:fi:amk-2022052612186
Tiivistelmä
During the last few decades the number of corporate takeovers has been rising progressively and therefore attracted many scholars to conduct multifaceted research within this field. However, the Pakistani and Indian merger and acquisition market is poorly covered. Therefore, present insights add considerable value to the existing evidence. The thesis uses the event study methodology and the independent t-sample test approach. By applying these tools, it measures the dynamics of the abnormal returns generated by Pakistani and Indian bidding and target firms’ shares around acquisition deal publications. This is done for short-term event windows, up to nineteen days around the event announcement. Further, the abnormal returns and financial performance of involved companies are regressed on transactions’ characteristics such as deal value, percentage acquired, mode of payment and industry relatedness to evaluate the sensitivities and drivers by the ordinary least square estimation approach (OLS). In addition, the abnormal returns are computed by using the Market Model and CAPM to explore any differences between two models. At the end the abnormal returns generated by different industries are compared with each other to explore which industry, either financial or manufacturing, generates more returns for their shareholders by a mergers and acquisitions process. The thesis found that both targets and bidding companies generate abnormal returns for their shareholders at announcement dates and besides these dates only normal returns are generated over event window. The current study also found that deal value and stock options used for payment has direct impact on the amount of abnormal returns of bidding companies. In the end the thesis did not find any significant difference between the abnormal returns computed by Market Model and CAPM.