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Do mega-mergers create value? The acquisition experience and mega-deal outcomes

Hu, N.; Li, L.; Li, H.; Wang, X.

Do mega-mergers create value? The acquisition experience and mega-deal outcomes Thumbnail


Authors

N. Hu

L. Li

H. Li



Abstract

Existing literature shows that mega-M&A deals valued over $500mil end up destroying the shareholder value of acquirers on a significant scale. Our paper considers mega-deal as a dependent event and examines the role of acquirer’s previous acquisition experience playing in the outcome of mega-deals. We find that mega-deals conducted by firms with a high level of acquisition experience, i.e. a firm completed at least 12 transactions before, are more likely to be completed. In addition, more experienced acquirer of mega-deals generate positive abnormal stock returns for shareholders in both short-run and long-run, with a dollar value gain of $50.6 million around deal announcement. We also find that more experienced acquirers are better at managing the post-acquisition integration process and enjoy a significant improvement in operating performance.

Citation

Hu, N., Li, L., Li, H., & Wang, X. (2020). Do mega-mergers create value? The acquisition experience and mega-deal outcomes. Journal of Empirical Finance, 55, 119-142. https://doi.org/10.1016/j.jempfin.2019.11.004

Journal Article Type Article
Acceptance Date Nov 7, 2019
Online Publication Date Nov 14, 2019
Publication Date Jan 31, 2020
Deposit Date Nov 9, 2019
Publicly Available Date May 14, 2021
Journal Journal of Empirical Finance
Print ISSN 0927-5398
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 55
Pages 119-142
DOI https://doi.org/10.1016/j.jempfin.2019.11.004
Public URL https://durham-repository.worktribe.com/output/1314271

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