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Do M&A Enhance Values? Mixed Methods And Evidence

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  • Amporn SOONGSWANG

Abstract

This study features the impact of takeovers on the event firms traded on the Stock Exchange of Thailand (SET). The study investigates a long-window abnormal return, or during a period of twelve months before and after the announcements using several metrics. The traditional models and the latest research method were employed for the abnormal return estimation for the bid period. These are the market and market-adjusted models and the matched reference portfolio of firms. The cumulative abnormal return (CAR), buy-and-hold abnormal return (BHAR) and monthly average abnormal return methods were used for the measurement of the returns of the two sets of firms. Both parametric and non-parametric test statistics were also used. The results suggest that target firm’s shareholders gain substantial and positive abnormal returns; meanwhile bidding firm’s shareholders realize positive rather than negative abnormal returns. The total gains are positive at 37.63% explaining takeovers create values.

Suggested Citation

  • Amporn SOONGSWANG, 2012. "Do M&A Enhance Values? Mixed Methods And Evidence," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 7(3(21)/ Fa), pages 312-325.
  • Handle: RePEc:ush:jaessh:v:7:y:2012:i:3(21)_fall2012:p:312
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    Keywords

    M&A; takeover; total gain; shareholder wealth; event study; Thailand;

    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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