Effects of Mergers and Acquisitions on Corporation Valuation
Abstract: The purpose of this paper is to examine the instantaneous wealth effect of mergers and acquisitions announcements on acquiring firm stockholders and bondholders. Based on a panel of 1,744 global M&A deals of 918 firms from 2016 to 2017 in the communication, technology, energy, and utility sectors, this paper finds a significant and positive hike in abnormal stock returns at the announcement ... read moremonth and no significant impact on bond returns. This jump in stock return is larger in the technology and communication sectors. Furthermore, there is no evidence showing that cross-border deals in the U.S can generate higher wealth. Third, this paper concludes that financial ratios have different impacts on abnormal stock returns in different industries. Finally, I find that M&A announcement increases individual bond Sharpe ratio at the announcement month.
Thesis (M.S.)--Tufts University, 2018.
Submitted to the Dept. of Economics.
Advisor: Marcelo Bianconi.
Committee: Federico Esposito, and Gilbert Metcalf.
Keywords: Economics, and Finance.read less