Mergers and Acquisitions: Shareholder Wealth Effects of Domestic, Cross-Border, and Cross-Continental Mergers and Acquisitions

* For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.

III. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

In recent times, merger and acquisition are considered as one of the important steps for strategic growth. A company can plan to merge or acquire another company if it thinks it is a good investment, or they will earn a sound investment from it. The primary goal of any company entering into merger or acquisition is to boost the shareholder wealth. From a financial perspective, merger is carried due to diversification. It is the process of reducing the risks through investment decisions. For example, many a times, a company is highly at risk since it has done enormous investment in one industry then it can intend to buy a business in another industry (Sky Plc, 1990). This is termed as acquisition and can be beneficial for the host country.

Mergers and acquisitions, usually shortened as M&A involves buying, selling, mixture of diverse corporations and particularly those that contract with comparable objects to exploit the entire revenues of the business. The chief purpose of mergers and acquisitions is to make sure that diverse businesses can be helpful in the fast development of a specific innovativeness. They do this lacking consuming to make a major, a combined scheme or a youngster object. An acquisition exactly mentions to the performance of buying additional corporation or commercial object. In several cases, it states to the buying of a much minor firm by a bigger one. In the lengthy run, the bigger firm obtains the management control of the minor firm but the first name of the business is continued. PepsiCo Inc. is one of the beverage manufacturing corporations that is an outcome of merger from minor firms. American Pie LLC is a food and beverage Industrial Corporation that does not have an antiquity of mergers and acquisitions and functions exclusively within the U.S. I will recount the procedure plans of the two companies, showing the operative policies of each of the businesses.

In modern business environments, there are increasing dynamics encouraging firms to utilize mergers and acquisitions to resolve resource. In dynamic business environments, the value of existing resources is subject to erosion, in some instances fast erosion. Consequently, firms continuously respond to changing environmental conditions by upgrading their resources and capabilities via renewal, acquisition, redeployment, and recombination. Mergers and acquisitions provide firms with a practical tool to close their resource gaps, allowing for a much faster reconfiguration of the product mix toward high-profit products than, for example, internal development (Eschen and Bresser, 2005). The need for corporate firms to achieve competitive advantage in a highly competitive global environment has necessitated the implementation of innovative strategies, one of them being mergers and acquisitions (Rizvi, 2010).

The completions and interests in Mergers and Acquisitions (M&A) is growing largely day by day (Michael A. Hitt, Jeffrey S. Harrison, R. Duane Ireland, 2001) During the recent recessions companies are looking into different ways to stay afloat, to grow and even continue to exist, and one of the best ways of doing this, is to merge or acquire another company (Dash, A, 2010) Lynch (cited in David Faulkner, Satu Teerikangas, Richard J. Joseph, 2012) also believes in some instances growth can take place within sector integrations which includes horizontal or vertical or even by going into a new sector by acquiring a new business, which is called diversification. A Merger or Acquisition takes place when two or more companies join

Managers are hired to act on behalf of the shareholders of a firm. However, this is not always the case as both parties have different objectives. The difference in interests between shareholders and managers ‘derives from the separation of ownership and control in a corporation’ (Berk and DeMarzo, 2011: 921). Whereas shareholders are interested in maximising their own wealth, managers may have more personal interests which differ to that of the shareholders. Downs and Monsen (no date, cited in Chin, Cooley and Monsen, 1968:435) suggest that managers self-interest lies in maximising their life-time income and that ‘such self-interest will be congruent with profit maximisation for the firm only in special cases’. This conflict between both

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This paper investigates the short-term wealth effects on foreign acquirers and Chinese targets involved in 37 cross-border mergers and acquisitions (M&As) in Chinese financial sector during the period 1990-2005. The intra-industry effects of significant cross-border M&As are then analyzed by examining the wealth effects on the rivals of Chinese target firms. The empirical results show that both experienced foreign bidders and Chinese targets obtain significant positive wealth gains during the event, while inexperienced foreign bidders suffer losses. This paper also demonstrates that foreign bidders with Chinese banking targets

In recent decades the brewing sector, despite its long tradition as local industry, has start to follow the increasing internationalization of economic activities and the globalization of markets, becoming now a global market governed by cross border takeovers and growth through acquisitions.

The Murdell-Flemming Trilemma or “Unholy Trinity” states that a government can only generate policy that satisfies two of three general desires; these desires are exchange rate stability, capital mobility, and domestic monetary autonomy (Cohen, 2010). Concerning the China, the general international monetary choices should be capital mobility and domestic monetary autonomy. In an era where multinational corporations are increasingly looking to cross-regional mergers and acquisitions to create value, it is more important than ever for China to retain capital mobility and domestic monetary autonomy (Cross-Regional, 2015). Through an examination of multinational corporations and domestic monetary policy choices, the need for capital mobility and domestic monetary autonomy become clear. This need is proven through the effects these policy choices have on domestic monetary value and the subsequent consequences these effects have on cross-regional mergers and acquisitions.

Abstract The nonlinear relationship between corporate value and managerial ownership is well documented. This has been attributed to the onset of managerial entrenchment, which results in a decrease of corporate value for increasing levels of managerial holdings. We propose a new structure for this relationship that accounts for the effect of conflicting managerial

Since 2000, the number of transnational mergers and acquisitions (M&A) is increasing not only for Chinese enterprises but slao for the international market as well. However the overall result of transnational M&A is not satisfactory. Analysis the international market, about 61% of mergers and acquisition in faliure (Mendenhal, 2005). Identically, more than 70% China companies were failed due to culture shock when they taken the process of merger, such as TCL, SAIC (Shanghai Automotive Industry Corporation) and others enterprises (Wang, 2010). It has been indicated (Wang, 2010) that the

Today 's business world shows a huge diversification in the shareholders of one company. In most countries, each investor only holds a very small fraction of issued shares by one corporation. This includes also the senior management.

Based on table 1-1, although not all the announced mergers and acquisitions are completed during a year, the percentage of completed mergers and announcements for both years 2011 and 2012 is more than 70% (2011 = 70.32% and 2012 = 72.77%). This is a good indication to a developing country like Malaysia because more than 70% of announced mergers and acquisitions are completed during a year. The increasing value of mergers and acquisitions over the years has motivated this study to examine whether the mergers and acquisitions activities does provide a fair return to the acquirers companies especially in term of the share prices changes. Therefore, it is important to examine whether there is any abnormal returns around the announcement period. However, if the market is efficient, we should expect the impact of mergers and acquisitions only take place on the day of announcement while the other days around the event windows will not generate significance different in abnormal returns.