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Do more mergers and acquisitions create value for shareholders?

Author

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  • Shaomeng Li

    (University of Oxford)

  • Guy S. Liu

    (Peking University HSBC Business School (PHBS))

  • Andros Gregoriou

    (University of Brighton)

Abstract

How does an investor value the announcement of new business integration? The history of acquirer’s acquisition may matter for investors. Existing research are divided to the positive or negative answer to the question. Based on the global evidence of 24,263 acquisitions across 81 countries over 19 years, this paper argues that the current contradictory views have failed to take into account the time interval between acquisitions. This is because the wavelength of merger frequency can change the investors’ expectations of new business integration and so investment returns. With control of the time interval of a new merger we discover that more mergers generate lower abnormal returns. This finding extends our understanding of the value perception of investors on a merger announcement that can be affected not only by merger numbers but also by their time distribution.

Suggested Citation

  • Shaomeng Li & Guy S. Liu & Andros Gregoriou, 2021. "Do more mergers and acquisitions create value for shareholders?," Review of Quantitative Finance and Accounting, Springer, vol. 56(2), pages 755-787, February.
    • Handle: RePEc:kap:rqfnac:v:56:y:2021:i:2:d:10.1007_s11156-020-00908-7
    DOI: 10.1007/s11156-020-00908-7
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    More about this item

    Keywords

    Merger and acquisition; Frequent acquisitions; Abnormal return; Merger Announcement; Management Hubris;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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