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Title: Target CEO turnover and acquiring shareholders' returns in the fourth M&A wave in the UK
Author: Han, Jingjing
Awarding Body: University of Edinburgh
Current Institution: University of Edinburgh
Date of Award: 2008
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This research provides an up-to-date perspective on the impact of the fourth M&A wave in the UK, on the target CEOs and the acquiring shareholder wealth around the takeover announcement during the period of 1998-2002. Recent M&As are characterised by many interesting features such as large cross-border takeovers, the use of equity as opposed to debt as in the 1980s and a preference for friendly, strategically motivated deals instead of hostile financially motivated deals. We distinguish between cross-border and domestic deals, takeovers on the rising side (the takeover active period) and the slumping side (the takeover less active period) of the M&A wave. Both univariate tests and multivariate tests are employed. This study considers not only target CEO departures, but also their career change two years after the takeover announcement. Additionally, we use both accounting and market-based performance measures, which are different from other studies and provide different perspectives of target performance. Results show a significant negative relation between the probability of post-takeover target CEO turnover and pre-takeover performance in the full samples. This indicates the disciplinary function of UK takeovers in the recent M&A wave. Such a relation only exists on the rising side of the M&A wave, implying that such disciplinary takeovers are confined only to the active period. However, a lower CEO turnover follows cross-border takeovers, indicating that the local CEO’s experience and knowledge of the business and of the environment appear to be valuable to foreign acquirers. Focusing on the acquiring stakeholders’ returns, this study looks at the international takeovers of UK targets, which fills the gap in the literature on UK takeovers. For the whole sample, we find significant losses for acquiring firms around the takeover announcement. However, foreign acquiring firms have significant positive gains over two months around the cross-border takeover announcement. Legal differences and culture differences are positively associated with the gains of acquiring firms.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available