Abstract
Recent research suggests that one of the main motivations for mergers and acquisitions is the attempt to acquire companies to incorporate intangible assets. Such assets provide important sources of sustainable competitive advantages and opportunities for growth. This article analyzes the strategies of engineering companies, as well as value creation in acquisition events of multinational companies, by using the study of the events method, providing an innovative way to be applied to this phenomenon. This method is used in our research to study the influence of the announcement of acquisitions on the abnormal accumulated returns of the acquiring companies, and is allowed to confirm that influence. In general, the average accumulated returns were positive and statistically significant in the three windows of the method, according to the significance tests used. The results validate the hypothesis that the events generate synergy gains for market players, emphasizing the importance of growth via acquisitions for the sector under analysis.
Highlights
Contemporary literature suggests that investment decisions are made based on several different reasons
Mostreported positivethe average market reaction in the market based on the based on the synthetic control model), while the company presented the lowest synthetic control model), while the WSP company presented the lowest cumulative average cumulative return model
We conducted an empirical study on the role of mergers and acquisitions on the market returns of the world’s leading consulting engineering companies, assessing the importance of this mechanism in generating market value for them
Summary
Contemporary literature suggests that investment decisions are made based on several different reasons. One of the main reasons is the prospect of business growth. If a company decides to expand or diversify, there are two possible paths: internal growth or mergers and acquisitions (M&A). According to Singh and Montgomery [1], the process of internal growth takes more time and can be more costly than buying an already established business. Several different advantages can be attributed to growth through mergers and acquisitions. Regardless of the form chosen, the objectives of this growth process must be related to shareholder value creation, by increasing the company’s competitiveness
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