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

Hu, N. and Li, L. and 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.

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 acquirer 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:Article
Full text:Publisher-imposed embargo until 14 May 2021.
(AM) Accepted Manuscript
First Live Deposit - 11 November 2019
Available under License - Creative Commons Attribution Non-commercial No Derivatives.
File format - PDF
(617Kb)
Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1016/j.jempfin.2019.11.004
Publisher statement:© 2019 This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Record Created:11 Nov 2019 09:43
Last Modified:15 Jan 2020 10:38

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