Evaluating the Instantaneous and Medium-Run Impact of Mergers and Acquisitions on Firm Values

46 Pages Posted: 20 Apr 2017

See all articles by Marcelo Bianconi

Marcelo Bianconi

Tufts University - Department of Economics

Chih Ming Tan

University of North Dakota - College of Business & Public Administration - Department of Economics

Date Written: April 19, 2017

Abstract

This paper contributes to the literature investigating the impact of mergers and acquisitions (M&A) activity on firm value. To do so, we exploit a large sample of 65,521 M&A deals globally from the Communications, Technology, Energy and Utilities sectors in the years of 2000 to 2010. We focus on an enterprise value multiple, the ratio of EV/EBITDA, as a measure of firm value. Using the difference-in-differences (DID) strategy (with and without propensity score matching), we find significant evidence of negative medium-run M&A effects and positive instantaneous M&A impact on firm value potentially because EV moves faster relative to a slow moving EBITDA.

Keywords: EV/EBITDA, treatment effect, DID estimation, propensity score matchings

JEL Classification: G34, C31, C33

Suggested Citation

Bianconi, Marcelo and Tan, Chih Ming, Evaluating the Instantaneous and Medium-Run Impact of Mergers and Acquisitions on Firm Values (April 19, 2017). Available at SSRN: https://ssrn.com/abstract=2955524 or http://dx.doi.org/10.2139/ssrn.2955524

Marcelo Bianconi (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States
617-627-2677 (Phone)

HOME PAGE: http://www.tufts.edu/~mbiancon

Chih Ming Tan

University of North Dakota - College of Business & Public Administration - Department of Economics ( email )

293 Centennial Drive Stop 8369
Grand Forks, ND 58202-8369
United States

HOME PAGE: http://sites.google.com/site/chihmingtan/home

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