Operating performance following mergers and acquisitions

2009 ◽  
Author(s):  
Elizaveta Bradulina
Keyword(s):  
Mergers And Acquisitions ◽  
Operating Performance

scholarly journals Mergers and acquisitions: A review of the literature

2006 ◽  
Vol 3 (3) ◽  
pp. 55-59 ◽  
Author(s):  
Raymond A. K. Cox
Keyword(s):  
Corporate Governance ◽  
Literature Review ◽  
Mergers And Acquisitions ◽  
Empirical Evidence ◽  
Operating Performance ◽  
Review Of The Literature ◽  
Before And After ◽  
And Control

This paper is a selected literature review of the theories and empirical evidence on mergers and acquisitions. Initially, the fundamental factors, and the underlying theories, causing mergers is explored. Subsequently, the empirical evidence is examined on: (1) the operating performance of the acquirers and the acquired firms before and after the merger, (2) stockholder wealth impact, (3) form of payment used to complete the acquisition, (4) conglomerate mergers, and (5) corporate governance affecting the firm’s ownership and control.

Hedge Fund Activism and Corporate M&A Decisions

2021 ◽  
Author(s):  
Szu-Yin (Jennifer) Wu ◽  
Kee H. Chung
Keyword(s):  
Mergers And Acquisitions ◽  
Selection Bias ◽  
Hedge Funds ◽  
Operating Performance ◽  
Hedge Fund ◽  
Corporate Control ◽  
Market For Corporate Control ◽  
Target Firms ◽  
Governance Practices ◽  
Hedge Fund Activism

This paper shows that hedge fund activism is associated with a decrease in mergers and acquisitions (M&A) and offer premiums and an increase in stock and operating performance. Activist hedge funds improve target firms’ M&A performance by reducing poor M&A, diversifying M&A, and the M&A of firms with multiple business segments. Activist hedge funds improve target firms’ M&A decisions by influencing their governance practices. We show that our results are unlikely driven by selection bias. Overall, activist hedge funds play an important role in the market for corporate control by increasing the efficiency of target firms’ M&A activities through interventions. This paper was accepted by Gustavo Manso, finance.

scholarly journals The Types of Covenants in Bond Issuance Programs of Mining Industry Companies

2016 ◽  
Vol 32 (2) ◽  
pp. 135-152
Author(s):  
Elżbieta Królikowska ◽  
Agata Sierpińska-Sawicz
Keyword(s):  
Mergers And Acquisitions ◽  
Significant Influence ◽  
Operating Performance ◽  
Mining Industry ◽  
Country Risk ◽  
Bank Loan ◽  
Financial Situation ◽  
Industry Risk ◽  
A Company

AbstractIn the article, the authors attempt to quantify the covenants, which are the special terms of the bond issuance programs, reducing a risk of the bondholders. The type and the character of the covenants depend on several circumstances like: financial situation of a bond issuer, industry risk, country risk or economic situation. The most common used covenants refer to several limitations like payments, taking out the loans, issuance of the next series of bonds, credit events, dividend payouts. The separate group of covenants are those which constitute a limitation of an assets disposal, a range of the investments, the mergers and acquisitions or those that refer to maintaining the rating. The belief that the bond issuance is the easiest way of rising the funds in comparison to a bank loan is not fully supported. The covenants have significant influence on a performance of a bond issuer. Some of the covenants cause losing a flexibility of a company and restrict a possibility of making the effective decisions which can lead to rising the risk of a bankruptcy. The limitations included in a bond issuance program could be particularly inconvenient for a company’s development and may demand the assets restructuring which range is hard to predict while a bond agreement is being signed. In terms of using the funds gained from bond issuance for an operating performance, the ability to go in a line with the covenants is less likely while the same funds will be spent on the investments which will generate the profits and amortisation in the future. It allows to gain the appropriate level of EBITDA as well as makes a bond repurchase possible. It is worth to add that the investors and the stock brokers who are responsible for a bond issuance program preparation have an influence on the quantity and quality of the covenants. They define the standard used covenants in the bond agreements. The knowledge and the negotiation skills of the managers have significant influence on the adjusting the bond contracts to the company and branch risk.

scholarly journals Consequences of Mergers and Acquisitions on Firm Performance: A Sector-Level Study of Public Listed Companies in China

2021 ◽  
Vol 20 (1) ◽  
pp. 113-138
Author(s):  
Char-Lee Lok ◽  
◽  
Yadong Chen ◽  
Lian Kee Phua ◽  
Min Fong Chan ◽  
...  
Keyword(s):  
Firm Performance ◽  
Mergers And Acquisitions ◽  
Good Governance ◽  
Operating Performance ◽  
High Technology ◽  
Capital Intensity ◽  
Growth Strategy ◽  
Service Firms ◽  
High Technology Firms ◽  
Public Health Information

As the motives of mergers and acquisitions (M&As) are different across industries, this study examined the synergy effects of technological gains and capital intensity on the operating performance of the acquiring firms after M&As. The sample comprised 434 completed M&As initiated by Chinese firms listed on the Shanghai and Shenzhen Stock Exchanges with 2,170 observations over the years 2012 to 2016. On average, the firms performed better after M&As. The results show that the operating performance of public health, information technology, telecommunication and financial service firms within the high-technology sector increased after M&As. This suggests that high-technology firms can benefit from M&As through a more extensive knowledge base and financial synergy. We also found that good governance characterized by board independence affects firm performance positively. Therefore, the acquisition of technology through M&As could be an essential corporate growth strategy in the Chinese capital market, which is transforming from a state-controlled economy to a more market driven one. The findings provide useful insights to both corporate players and policy-makers on the types of M&As that stand higher chances to generate positive outcomes and those that need extra measures and further scrutiny to prevent inefficient allocation of resources.

Post-operating performance of construction mergers and acquisitions of the United States of America

2006 ◽  
Vol 33 (3) ◽  
pp. 266-277 ◽  
Author(s):  
Jongsoo Choi ◽  
Donald Harmatuck
Keyword(s):  
United States ◽  
Stock Market ◽  
Mergers And Acquisitions ◽  
Construction Industry ◽  
United States Of America ◽  
Operating Performance ◽  
The United States ◽  
Market Returns ◽  
Stock Market Returns ◽  
Research Outcomes

A previous study assessed stock market returns (ex ante expectations), and this study examines the actual operating performance (ex post-operating performances) of the mergers and acquisitions (M&A) observed during the past two decades (1980-2002) in the construction industry in the United States of America. Utilizing various statistical tools and longitudinal data analysis modeling techniques, three hypotheses were tested. First, the level of synergistic gains, measured as operating cash flow returns, was not improved significantly after firm integration. Second, regarding the management wealth maximization hypothesis, the size of firms dramatically increased after the integration of the firms, and the operating performance was slightly improved compared with that before the event. Research outcomes also indicated that the previous research findings concerning stock market returns on M&A were consistent with the long-term operating performance, and thus supported the market efficiency hypothesis. Lastly, M&A guidelines for the construction industry are presented based on the research outcomes from both stock market return and operating performance analysis. Key words: mergers and acquisitions, diversification strategy, operating performance.

Sign in / Sign up

Export Citation Format

Share Document