Please use this identifier to cite or link to this item: https://www.um.edu.mt/library/oar/handle/123456789/38562
Title: The impact of mergers and acquisitions on shareholder wealth
Authors: Galea, Daniel
Keywords: Consolidation and merger of corporations
Capital assets pricing model
Stockholder wealth
Issue Date: 2018
Citation: Galea, D. (2018). The impact of mergers and acquisitions on shareholder wealth (Bachelor's dissertation).
Abstract: Mergers and acquisitions are an increasingly popular method of achieving corporate objectives. Among the many benefits they convey, their main efforts lie in increasing wealth for both target and acquiring firm shareholders. Based on a sample of British, German, Italian, and Spanish organisations which have recently merged with or acquired another entity, this study aims to identify the accurate effect these transactions have on value creation. With the intention of yielding a better scenario understanding, a separate investigation of the countries was also carried out so as to gauge any emerging trends. In order to attain the goals set for this research, an event study form of methodology was employed. This approach allowed the author to quantify the amount of average abnormal returns and cumulative average abnormal returns generated over several event windows by making use of the Capital Asset Pricing Model. From an investor’s perspective, the results obtained through the research serve as a benchmark for better decision making in terms of identifying the appropriate time to capitalise. In line with preceding literature, the outcomes of this study suggest that on average, target firm shareholders tend to gain wealth around an M&A announcement while those of the bidding entity do not. Backing these observations, acquired companies recorded substantially high amounts of positive cumulative average abnormal returns, whereas acquiring firms reported negative cumulative average abnormal returns for a significant amount of event windows. The findings obtained postulate a considerable amount of insight for both managers and investors. They give a clear image of expected outcomes with the hope of transmitting valuable information to decision makers and shareholders on the strategies they should adopt and others they should stray clear of. The approach adopted in this study is of particular benefit to equity holders when considering the fact that these transactions may be effectively addressed and carried out in a way that will aid in increasing their overall wealth.
Description: B.COM.(HONS)BANK.&FIN.
URI: https://www.um.edu.mt/library/oar//handle/123456789/38562
Appears in Collections:Dissertations - FacEma - 2018
Dissertations - FacEMABF - 2018

Files in This Item:
File Description SizeFormat 
18BBNK030.pdf
  Restricted Access
982.51 kBAdobe PDFView/Open Request a copy


Items in OAR@UM are protected by copyright, with all rights reserved, unless otherwise indicated.