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What are the Causes and Effects of the M&As? The UK Evidence

Guo, Jie (Michael); Petmezas, Dimitris

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Jie (Michael) Guo


This paper examines the link between the causes and effects of mergers and acquisitions. By using a sample of UK acquisitions, which have the distinct characteristics of limited use of stock as means of payment and dominance of private acquisitions, the evidence shows that, on average, there is a substantial price run-up for acquirers prior to an acquisition announcement followed by a significant drop of bidder’s price in the post-event period. This indicates, to an extent, that corporate acquisitions are the effect of good performance rather than the cause. However, the results also reflect that a relatively better acquisition strategy for a firm to create value is by making many small acquisitions rather than a small number of large acquisitions, implying that acquisitions also drive performance. Overall, the evidence found is mixed and suggests that in the UK market, acquisition returns cannot be solely based on the market driven explanation.


Guo, J. (., & Petmezas, D. (2012). What are the Causes and Effects of the M&As? The UK Evidence. Multinational finance journal, 16(1/2), 21-47.

Journal Article Type Article
Publication Date 2012-06
Deposit Date Aug 2, 2020
Publicly Available Date Oct 11, 2022
Journal Multinational Finance Journal
Print ISSN 1096-1879
Publisher Multinational Finance Society
Peer Reviewed Peer Reviewed
Volume 16
Issue 1/2
Pages 21-47
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Published Journal Article (199 Kb)

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Copyright Statement
Multinational Finance Society (MFS) / Journal (MFJ) operates under the Creative Commons Licence CC-BY-NC. This allows for the reproduction of articles, free of charge, for non-commercial use only and with the appropriate citation information.

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