Gains from Mergers and Acquisitions Around the World: New Evidence

Authors

  • G. Alexandridis,

    1. G. Alexandridis is an Assistant Professor of Finance at the ICMA Centre, Henley Business School, Reading University, United Kingdom. D. Petmezas is an Associate Professor of Finance at the University of Surrey, School of Management, United Kingdom. N.G. Travlos is the Kitty Kyriacopoulos Chair in Finance and Dean at the ALBA Graduate Business School, Greece.
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  • D. Petmezas,

    1. G. Alexandridis is an Assistant Professor of Finance at the ICMA Centre, Henley Business School, Reading University, United Kingdom. D. Petmezas is an Associate Professor of Finance at the University of Surrey, School of Management, United Kingdom. N.G. Travlos is the Kitty Kyriacopoulos Chair in Finance and Dean at the ALBA Graduate Business School, Greece.
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  • N.G. Travlos

    1. G. Alexandridis is an Assistant Professor of Finance at the ICMA Centre, Henley Business School, Reading University, United Kingdom. D. Petmezas is an Associate Professor of Finance at the University of Surrey, School of Management, United Kingdom. N.G. Travlos is the Kitty Kyriacopoulos Chair in Finance and Dean at the ALBA Graduate Business School, Greece.
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  • We would like to thank Yakov Amihud, Christos Cabolis, Ettore Croci, John Doukas, Mara Faccio, Jayant Kale, Aneel Keswani, Meziane Lasfer, Spencer Martin, Krishna Paudyal, Ramesh Rao, and Frederik Schlingemann, as well as seminar participants at the ALBA Graduate Business School, Cass Business School, Sabanci University, and participants at the European Finance Association (EFA) Conference (2008), the European Financial Management Association (EFMA) Conference (2008), the Southwestern Finance Association (SWFA) Conference (2009), the Southern Finance Association (SFA) Conference (2009) and the Midwest Finance Association (MFA) Conference (2010) for useful comments and suggestions. We are also grateful for the insightful comments received from Bill Christie (editor) and two anonymous referees. Travlos acknowledges financial support received from the Kitty Kyriacopoulos Chair in Finance. All errors are our own.

Abstract

Using a global M&A data set, this paper provides evidence that the empirical observations relating public acquisitions to, at best, zero abnormal returns, and their stock-financed subset to negative abnormal returns for acquiring firms around the deal announcement are not unanimous across countries. Acquirers beyond the most competitive takeover markets (the United States, United Kingdom, and Canada) pay lower premia and realize gains, while share-for-share offers are at least non-value-destroying for their shareholders. In contrast, target shareholders within these markets gain significantly less, implying that the benefits generated are more evenly split between the involved parties.

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