Impact Of Takeovers Research Articles

A post-merger performance of acquiring firms: evidence from French stock market

This paper investigates the impact of takeovers on the short- and long-run stock market performance of a sample of 87 mergers and acquisitions transactions undertaken between 2008–2012 by French financial and real estate industry. For the short horizon event studies, document short-run non-significant abnormal returns of acquiring companies. Furthermore, we test the financial performance by computing the cumulative abnormal returns (CAR), the buy and hold abnormal returns (BHAR) and the Jensen measure (alpha) to study long horizon of up to 60 months, as part of the calendar analysis, and 36 months in the event approach. The results show negative and significant long-term abnormal returns on acquiring companies either on event time or in calendar analysis for different horizons.

The Impact of Takeovers on the Acquiring Firms in the Pharmaceutical Market

The Impact of Takeovers on the Acquiring Firms in the Pharmaceutical Market

Impact of Plant Takeover on Employee Turnover: Cutting Fat or Losing Talent?

Motivated by the ambiguous outcomes of Mergers and Acquisitions (M&A), the following paper analyses the impact of takeovers on employee turnover. Based on management, organizational and psychological literature, I advance the prediction that employees working for a plant that is acquired are more likely to turn over following the acquisition than they were before. I also speculate that, based on the characteristics of those turning over, a large part of the turnover might be dysfunctional for the firm. I test these predictions on a matched sample of 17.915 employees who worked in Denmark in the period between 2001 and 2007. Preliminary results in a Difference-in-Differences setting show that employees are more likely to leave after a plant takeover. The increase in turnover subdues in the years following the acquisition, supporting the view of shocking events as a trigger for employee turnover. Further analysis provides evidence that although the effect might be present across-the-board, it is particularly significant among top performers.

Impact of takeovers on profitability of target companies: Evidence from Croatian companies

It is possible to find scientific confirmation of positive, negative or neutral influence of takeovers on company's profitability. Therefore, this study aimed to highlight the sensitivity of research results on manipulation in terms of used methodology and indicators. Using t-test for paired samples and five selected profitability indicators for target and peer companies, it has been proven that it is possible to obtain significantly different results even when using the same sample and the same reference period. The research has been performed on the sample of Croatian companies, which were taken over in the period from year 2003–2008.

Total Gains from Mergers and Acquisitions

This study features the impact of takeovers on both target and bidding firms traded on the Stock Exchange of Thailand (SET). The study investigates a long-window abnormal return, or during a period of twelve months before and after the announcements using several metrics. Their long-term bid period returns were measured by cumulative, buy-and-hold average abnormal returns estimated from the market and market-adjusted models. The three parametric statistic tests: Standardized-residual test, standardized cross-sectional test and conventional t-tests were used for significance tests of the means. The findings suggest that a Thai takeover results in substantial and positive total gains for the event firms’ shareholders.

Training Needs in Corporate Takeovers

This article reports the impact on training of threatened and actual takeovers in three corporations. Observations were made and data were gathered in these manufacturing firms during the process of conducting training needs assessments. The information was analyzed for the purpose of developing a better understanding of the impact of takeovers. Three major types of changes were observed: staff and financial reductions, newly assigned training goals, and the perspective toward the takeover of those who were directing training.

Takeovers and the Cross-Section of Returns

This paper considers the impact of takeover (or acquisition) likelihood on firm valuation. If firms are more likely to acquire during times when they have free cash and/or when the required rate of return is low, takeover targets become more sensitive to shocks to aggregate cash flows and/or to the price of risk. Thus, ceteris paribus, firms that are exposed to takeovers will have a different rate of return from firms that are protected from takeovers. Using estimates of the likelihood that a firm will be acquired, we create a takeover-spread portfolio that buys firms with a high likelihood of being acquired and shorts firms with low likelihood of being acquired. Relative to the Fama-French model, the takeover-spread portfolio generates annualized abnormal returns of up to 12% between 1980 and 2004. Further, the takeover-spread portfolio is shown to be important in explaining cross-sectional differences in equity returns. Additionally, using a two-beta model that distinguishes cash flow shocks from discount rate shocks, we show that firms more likely to be taken over have higher betas on the aggregate cash factor. Finally, we provide an explanation for the existence of abnormal returns associated with governancespread portfolios (Gompers, Ishii and Metrick, 2003 and Cremers and Nair, 2005), and relate the takeover-spread portfolio returns to takeover activity in the economy.

The Impact of Takeovers on Shareholder Wealth during the 1920s Merger Wave

We examine the impact of merger announcements on portfolios of acquiring firm and target firm common stock from 1919 to 1930. Despite vast changes in the economic and regulatory environment, overall acquisition profitability has remained remarkably constant over the last 70 to 80 years. Target firm shareholders in the 1920s clearly gained from takeovers, averaging abnormal returns in excess of 15%, while acquiring firm shareholders essentially broke even. Synergistic or monopolistic gains from consolidation were minimal. Unlike the more recent experience, target firm and acquiring firm abnormal returns were largely unaffected by the mode of acquisition, the means of financing, or the degree of industrial relatedness.

Evaluating the Effects of External Takeover on the Performance of Regional Companies: The Case of Scotland, 1965 to 1980

A framework is suggested for the evaluation of the effects of external takeover on regional economic performance, and an approach is offered to identify the impact of takeover on the performance of the acquired firm. The approach is then applied to estimate the effects of external takeover on the performance of Scottish manufacturing companies between 1965 and 1980. The results show that external takeover improved sales performance but lowered rates of return in acquired firms. Employment was, in general, unaffected. Overall, the effects on acquired firms are judged to have been beneficial, but evidence of harmful effects on the wider regional economy suggests that it cannot be assumed that such takeovers will not be against the public interest.

Takeovers, Shareholder Returns, and the Theory of the Firm

The paper examines recent merger and takeover activity in the United Kingdom. Specifically, the impact of takeovers on shareholder returns and management benefits is analyzed, and some implications for the theory of the firm are drawn from the results. The research showed that mergers and takeovers resulted in benefits to the acquired firms' shareholders and to the acquiring companies' managers, but that losses were suffered by the acquiring companies' shareholders. The results are consistent with takeovers being motivated more by maximization of management utility reasons, than by the maximization of shareholder wealth.