Revenue enhancement through mergers and acquisitions: Wealth effects of method of payment

Jianyu Ma, José A. Pagán, Yun Chu, Gökçe Soydemir

Research output: Contribution to journalReview articlepeer-review

Abstract

Many firms enhance revenue through mergers and acquisitions deals because synergy occurs when the value of the combined firm after the merger is greater than the sum of the value of the bidding firm and the value of the target firm before the merger. This paper analyses value creation of mergers and acquisitions in ten Asian emerging markets over the past 12 years. The stock markets react positively to M&A deals around the time of the announcement in spite of variation in the method of payment or the types of the target form. Method of payment affects abnormal returns. The difference between cash only payment and stock only payment is statistically significant. When the target is a private firm or a subsidiary, bidder firms realise higher positive abnormal returns than that when the target is a public firm. However, the differences (public vs. private and public vs. subsidiary) are not statistically significant at conventional levels.

Original languageEnglish (US)
Pages (from-to)274-290
Number of pages17
JournalInternational Journal of Revenue Management
Volume6
Issue number3-4
DOIs
StatePublished - 2012

Keywords

  • Abnormal returns
  • Emerging markets
  • M & A
  • Mergers and acquisitions
  • Method of payment
  • Revenue enhancement

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Fingerprint Dive into the research topics of 'Revenue enhancement through mergers and acquisitions: Wealth effects of method of payment'. Together they form a unique fingerprint.

Cite this