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Post-merger operational performance of ICT companies in North America and Europe
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School of Business |
Master's thesis
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en
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59
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This thesis analyses operational performance of ICT companies in North America and Europe after mergers completed from 2000 to 2011. The measure of operational performance is EBITDA returns on the market value of assets, which is not dependent on the methods of financing the transaction or merger accounting. European merged companies demonstrate considerably lower abnormal returns on assets than North American firms, though the present study does not reach statistical significance of the American abnormal return coefficient due to the small sample. The results hold after controlling for the price-to-book ratios of the target and the acquirer, value of transaction, method of payment, relative value of the target to the acquirer, and cross-order nature of acquisitions. In addition, they are robust to equity fluctuations during the time studied and variance in industry definitions. Furthermore, there is a strong positive correlation between efficiency improvements after acquisitions and stock price returns around the merger announcements. The underperformance of European companies may be explained by the differences in telecom industry regulation between the EU member states as well as crossborder cultural differences.