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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Date
2017
Department
Major/Subject
Mcode
Degree programme
Finance
Language
en
Pages
59
Series
Abstract
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 control-ling for the price-to-book ratios of the target and the acquirer, value of transaction, method of pay-ment, relative value of the target to the acquirer, and cross-border 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 acquisi-tions and stock price returns around the merger announcements. The underperformance of Europe-an companies may be explained by the differences in telecom industry regulation between the EU member states as well as cross-border cultural differences.Description
Thesis advisor
Nyberg, PeterKeywords
mergers, acquisitions, operational performance, ICT, telecommunications