A Comprehensive Review of Returns to Acquiring Firms From Mergers: Evidence from the Last Two Decades

Author

Lo-Chi Lin, Fontbonne College

Year of Award

1994

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Business Administration

Department

Business Administration

Keywords

shareholders, market, acquisitions

Abstract

Mergers and acquisitions have been the focus of finance literature in recent years. The significance and importance of the consequences of those activities have been one of the major concerns of both economists and policy makers. This study is to investigate those issues of mergers and acquisitions.

Over the past two decades, there have been a great number of studies studying the consequences of changes of corporate control. One of the important issues studied over this period of time has been the wealth transfer effect for shareholders of acquiring firms. These studies have attempted to find out the wealth changes for shareholders of acquiring firms resulting from the mergers and acquisitions activities. If shareholders of acquiring firms have significantly negative gains from those transactions, and if management's major goal is to maximize the shareholders' wealth, those activities should not have occurred in the first place. On the other hand, if management has goals other than value maximization, management will engage in those activities without considering the wealth effect on sharesholders and pursue their own personal interest.

Several researchs have documented that the shareholders of acquiring firms have either zero or significantly negative gains. The others, however, have shown that the shareholders of acquiring firms have actually significantly positive gains. These ambiguous and controversial results deserve further investigations that can help us understand the true returns for shareholders of acquiring firms and the management's incentives.

Document Type

Restricted Thesis

Recommended Citation

Lin, Lo-Chi, "A Comprehensive Review of Returns to Acquiring Firms From Mergers: Evidence from the Last Two Decades" (1994). All Theses, Dissertations, and Capstone Projects. 215.
https://griffinshare.fontbonne.edu/all-etds/215