Motives for Mergers and Acquisitions: Ex‐Post Market Evidence from the US

19 Pages Posted: 12 Jan 2013

See all articles by Hien Thu Nguyen

Hien Thu Nguyen

Vietnam National University - Ho Chi Minh City (VNU-HCM)

Kenneth Yung

Old Dominion University - Finance

Qian Sun

Kutztown University

Date Written: November/December 2012

Abstract

Despite extensive research, merger motivation is largely inconclusive. Incomparable methodologies further exacerbate debates in the extant literature. This study uses a recently developed technique to examine post‐acquisition evidence as to the motives behind merger and acquisition activity. Using a sample of 3,520 domestic acquisitions in the United States, we find that 73% are related to market timing; 59% are related to agency motives and/or hubris; and 3% are responses to industry and economic shocks. Our results also show that about 80% of the mergers in our sample involved multiple motives. Thus, in general it is very difficult to have a clear picture of merger motivation because value‐increasing and value‐decreasing motives may coexist.

Keywords: mergers and acquisitions, merger motivation, MB ratio decomposition

Suggested Citation

Nguyen, Hien Thu and Yung, Kenneth and Sun, Qian, Motives for Mergers and Acquisitions: Ex‐Post Market Evidence from the US (November/December 2012). Journal of Business Finance & Accounting, Vol. 39, Issue 9‐10, pp. 1357-1375, 2012. Available at SSRN: https://ssrn.com/abstract=2199727 or http://dx.doi.org/10.1111/jbfa.12000

Hien Thu Nguyen (Contact Author)

Vietnam National University - Ho Chi Minh City (VNU-HCM) ( email )

6 Quarter, Linh Trung Ward
Thu Duc District
Ho Chi Minh City
Vietnam

Kenneth Yung

Old Dominion University - Finance ( email )

School of Business and Public Administration
Norfolk, VA 23529-0222
United States
757-683-3573 (Phone)

Qian Sun

Kutztown University

Kutztown, PA 19530
United States

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