Large shareholders and value creation through corporate acquisitions in Europe. The identity of the controlling shareholder matters

Katrien Craninckx and Nancy Huyghebaert

European Management Journal, 2015, vol. 33, issue 2, 116-131

Abstract: We investigate whether and how major shareholders influence M&A wealth effects for listed acquirers in Europe. To that end, we examine 342 intra-European takeovers of listed target firms announced between 1997 and 2007. We find that family-controlled acquiring firms on average engage in deals with substantially larger value creation, particularly in Continental Europe. However, this positive family effect disappears in industry-diversifying acquisitions, consistent with the idea that those family-controlled firms may also pursue corporate diversification through M&As in order to diversify the family wealth. Moreover, family owners across Europe cannot curb low-value acquisitions driven by managerial overconfidence. We relate this finding to the strong connections of family owners with management in family-controlled firms. Next, large institutional shareholders all over Europe are associated with the lowest-value deals, but they are able to limit the negative effects of managerial overconfidence. As to the division of M&A gains, we find that regardless of their identity, large acquirer shareholders tend to put their firm in a weaker negotiation position. Lastly, we find no robust support for the idea that major owners are less likely to pursue private benefits through M&As in countries with stronger investor protection.

Keywords: Mergers and acquisitions; Value creation; Ownership structure (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eurman:v:33:y:2015:i:2:p:116-131

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DOI: 10.1016/j.emj.2014.09.001

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