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Title: An investigation into the effects of M&As on firms' operating performance and employment in the U.K.
Author: Glimidis, Nikolaos
Awarding Body: University of Edinburgh
Current Institution: University of Edinburgh
Date of Award: 2007
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This study examines the post-acquisition operating performance and the employment effects of 79 takeovers in the U.K. from January 1990 until December 1996. Findings suggest merging firms, on average, experience a decline in post-acquisition operating performance, regardless of whether the effects of pre-acquisition performance on post-merger performance are controlled for or not. Therefore, the U.K. market for corporate control appears to be competitive and consequently, there are not many opportunities for a large number of profitable takeovers. However, strategic acquisitions and related acquisitions create synergies which are reflected in an observed improvement of their post-takeover performance. Hostile acquisitions underperform friendly ones and acquisitions financed solely by cash underperform those financed solely by stock or by a combination of stock and cash. Large acquisitions perform better than small acquisitions. Performance was adjusted using both industry-median firms and pairs of firms, matched on the basis of industry relatedness, pre-acquisition performance, and size, for each target and bidder. Our results provide some evidence that deals closed at a premium perform better than deals closed at a discount. A positive and statistically significant relationship was found between the combined cumulative market-adjusted returns on assets at the time of the event announcement and the post-merger operating cash flow returns on assets once the effects of pre-merger performance on post-merger performance are controlled for. However, we identify a degree of optimism on behalf of the stock market agents in the period of the event announcement. Merging firms employ as many employees per thousand pounds of sales as their industry peers in the pre-merger period, whereas employment rates fall below industry’s norms in the post-takeover period. Nonetheless, no statistically significant change was identified in the median number of employees per thousand pounds of sales between the post- and the pre-merger periods.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available