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

Hu, Nan, Li, Lu, Li, Hui and Wang, Xing (2020) Do mega-mergers create value? The acquisition experience and mega-deal outcomes. Journal of Empirical Finance, 55. pp. 119-142. ISSN 0927-5398

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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 acquirers 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
Schools and Departments: University of Sussex Business School > Accounting and Finance
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 06 Jan 2022 09:15
Last Modified: 17 Feb 2022 11:07
URI: http://sro.sussex.ac.uk/id/eprint/103707

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