Abstract
This study investigates the correlation between mergers and acquisitions (M&As) activities and industry-level performance. While extensive research on M&As has focused on financial performance at the firm-level around the merger announcement, not much focus has been given to the relationship between M&A activities and financial performance at the industry level. Using global data from the S&P (Standard & Poor’s) Capital IQ platform database, this study examines the significance of relationships of 12 industry-level financial values with M&A frequency and transaction value across 11 industry sectors throughout 2009–2018. The results show that M&A activities play a key role in identifying industries with lots of potential and that strategic investment planning can be drawn from both industry and time lag perspectives. This study bridges the gap by exploring the complexity of M&A performance across various firms and industries, and supports forward-looking investment processes by delineating emerging industries with expected positive returns.
Highlights
Mergers and acquisitions (M&A) transactions have become an integral part of today’s business environment
This study identifies the correlation between M&A transactions and industry-level performance for offering a comprehensive view of the effects of M&A activities at the industry level and suggests the strategic investment planning considering the time lag perspectives by visualizing changes in the financial relationship level by time lag differences
The number of M&As is not found to have significant relationship with all financial values in the year when M&As occur, but it is significantly related to most financial values with a time lag 2
Summary
Mergers and acquisitions (M&A) transactions have become an integral part of today’s business environment. The term M&A refers to the consolidation of firms or assets through various types of financial transactions, including mergers, acquisitions, consolidations, tender offers, purchase of assets, and management acquisitions [1]. M&A is generally considered to denote efforts to provide synergistic benefits for the acquirer, and to unify technology and market-related aspects [2,3]. Over the last few decades, M&As have received extensive research attention from several disciplines including economics, finance, accounting, marketing, and management of technology. Due to the various effects that M&A has on value creation in the business landscape, many studies have been conducted on the correlation between M&A transactions and performance [8,9,10,11]
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