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The Impact of Single and Multiple Mergers and Acquisitions on Shareholders¡¯ Wealth of UK Bidder Firms

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  • George Giannopoulos
  • Ehsan Khansalar
  • Patel Neel

Abstract

This study investigates the impact of takeover announcements on UK acquirer shareholders¡¯ wealth during the period 2002-2006. More specifically, it is investigated whether the impact of single acquirers on shareholders¡¯ wealth is significantly different from the impact of multiple acquirers. Findings suggest that acquirer shareholders experience positive abnormal returns during the announcement period. Moreover, the results indicate single acquirers consistently outperform multiple acquirers when testing for deal characteristics such as: payment method (cash or equity), target status (public or private), target location (domestic or cross-border) and industry relatedness (specification or diversification). Performance declines with sequential acquisitions due to merger programme announcement hypothesis. Successful first time acquirers suffer from hubris whilst unsuccessful first time acquirers learn from their experiences suggested by the organisation learning hypothesis but go on to suffer from hubris. Acquisitions of private firms yield significant abnormal returns whereas public acquisitions reduce the value of UK acquirers. The effect of cash and equity, domestic and foreign, related and unrelated takeovers are inconclusive for the short-term windows investigated by this study.

Suggested Citation

  • George Giannopoulos & Ehsan Khansalar & Patel Neel, 2017. "The Impact of Single and Multiple Mergers and Acquisitions on Shareholders¡¯ Wealth of UK Bidder Firms," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(3), pages 141-167, March.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:3:p:141-167
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    References listed on IDEAS

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    More about this item

    Keywords

    mergers and acquisitions; takeover announcements; shareholders¡¯ wealth;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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