The performance of mergers and acquisitions in emerging capital markets: new evidence

Svetlana Grigorieva () and Tatiana Petrunina ()
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Tatiana Petrunina: Corporate Finance Center, National Research University Higher School of Economics, Moscow, Russia

HSE Working papers from National Research University Higher School of Economics

Abstract: Researchers have long tried to define the impact of corporate mergers and acquisitions on company performance. We contribute to the existing literature by examining the influence of M&A deals on company value in the short-run using the event study method and in the long-run based on economic profit concept. Examining a sample of 80 deals initiated by companies from emerging capital markets over 2002-2009, we find that M&As are value-destroying deals for the combined firms. Results from the long-run analysis prove the negative industry-adjusted differences between post-acquisition and pre-acquisition performance measures. The difference is equal to a significant -3.3% for the EBITDA/Sales ratio. The Economic Profit approach demonstrates a similar result. Our findings from the short-run analysis indicate that the announcements of M&A deals generate significant high returns for target shareholders, while the returns to bidder shareholders are not significant. We also analyze the determinants of M&A performance, such as method of payment, business similarity, and the target’s country.

Keywords: Mergers and Acquisitions; Value Creation; Economic Profit; Company Performance (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2013
New Economics Papers: this item is included in nep-cse, nep-eff and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in WP BRP Series: Financial Economics / FE, October 2013, pages 1-34

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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:20/fe/2013

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