Revenue enhancement through mergers and acquisitions: wealth effects of method of payment

Jianyu Ma, José A. Pagán, Yun Chu and Gokce Soydemir ()

International Journal of Revenue Management, 2012, vol. 6, issue 3/4, 274-290

Abstract: Many firms enhance revenue through mergers and acquisitions deals because synergy occurs when the value of the combined firm after the merger is greater than the sum of the value of the bidding firm and the value of the target firm before the merger. This paper analyses value creation of mergers and acquisitions in ten Asian emerging markets over the past 12 years. The stock markets react positively to M%A deals around the time of the announcement in spite of variation in the method of payment or the types of the target form. Method of payment affects abnormal returns. The difference between cash only payment and stock only payment is statistically significant. When the target is a private firm or a subsidiary, bidder firms realise higher positive abnormal returns than that when the target is a public firm. However, the differences (public vs. private and public vs. subsidiary) are not statistically significant at conventional levels.

Keywords: revenue enhancement; mergers and acquisitions; M%A; abnormal returns; emerging markets; payment methods; revenue management; wealth effects; stock markets. (search for similar items in EconPapers)
Date: 2012
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