Value Creation from M&As: New Evidence
43 Pages Posted: 11 Oct 2016 Last revised: 29 Jan 2018
Date Written: May 17, 2017
M&A deals create more value for acquiring firm shareholders post-2009 than ever before. Public acquisitions fuel positive and statistically significant abnormal returns for acquirers while stock-for-stock deals no longer destroy value. Mega deals, priced at least $500 mil, typically associated with more pronounced agency problems, investor scrutiny and media attention, seem to be driving the documented upturn. Acquiring shareholders now gain $62 mil around the announcement of such deals; a $325 mil gain improvement compared to 1990-2009. The corresponding synergistic gains have also catapulted to more than $542 mil pointing to overall value creation from M&As on a large scale. Our results are robust to different measures and controls and appear to be linked with profound improvements in the quality of corporate governance among acquiring firms in the aftermath of the 2008 financial crisis.
Keywords: Mergers and Acquisitions, Acquirer Returns, Mega-Deals, Synergy Gains, Value Creation, Financial Crisis
JEL Classification: G34
Suggested Citation: Suggested Citation