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Evaluating the instantaneous and medium-run impact of mergers and acquisitions on firm values

Marcelo Bianconi () and Chih Ming Tan

International Review of Economics & Finance, 2019, vol. 59, issue C, 71-87

Abstract: This paper contributes to the literature investigating the impact of mergers and acquisitions (M&A) activity on an acquirer's firm value. To do so, we exploit a large sample of 65,521 M&A deals globally from the Communications, Technology, Energy and Utilities sectors in the years of 2000–2010. We focus on an enterprise value multiple, the ratio of EV/EBITDA, as a measure of firm value. Using the difference-in-differences (DID) strategy with and without propensity score matching, we find significant evidence of negative medium-run M&A effects and positive instantaneous M&A impact on firm value potentially because EV moves faster relative to a slow moving EBITDA.

Keywords: EV/EBITDA; Treatment effect; DID estimation; Propensity score matching (search for similar items in EconPapers)
JEL-codes: G34 C31 C33 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:reveco:v:59:y:2019:i:c:p:71-87