The Impacts of Mergers, Acquisitions, and Joint Ventures on Agribusiness and Resource Firms

20 Pages Posted: 23 Oct 2017

See all articles by Darren Hudson

Darren Hudson

Texas Tech University

Bahtiyar Babanazarov

Sun Trust Banks

Sanja Zivkovic

Texas Tech University - Department of Agricultural and Applied Economics

Date Written: October 20, 2017

Abstract

This research is an empirical study of effects of mergers and acquisitions and joint ventures (MAJV) on the acquiring and participating firms’ long term ex-post performance and idiosyncratic risk. The results show that acquirers from the food and pharmaceutical industries enjoy positive abnormal returns following M&A while acquirers from industries such as recreational products, entertainment, nonmetallic mining, construction, and real estate lose their wealth following the M&A. Acquiring firms enjoy lower idiosyncratic risk following the M&A compared to other firms in their industries that did not engage in M&A.

The study of joint ventures reveals that firms that form joint ventures gain positive abnormal returns following the joint venture formation and their idiosyncratic risk is significantly lower than the firms that did not engage in joint ventures but are in the same industry. The results support the findings of previous literature which suggests that joint ventures create synergy.

Keywords: mergers, acquisitions, joint ventures, performance, risk

Suggested Citation

Hudson, Darren and Babanazarov, Bahtiyar and Zivkovic, Sanja, The Impacts of Mergers, Acquisitions, and Joint Ventures on Agribusiness and Resource Firms (October 20, 2017). Available at SSRN: https://ssrn.com/abstract=3056524 or http://dx.doi.org/10.2139/ssrn.3056524

Darren Hudson (Contact Author)

Texas Tech University ( email )

Box 42132
Lubbock, TX 79409-2132
United States

Bahtiyar Babanazarov

Sun Trust Banks ( email )

Richmond, VA
United States

Sanja Zivkovic

Texas Tech University - Department of Agricultural and Applied Economics ( email )

Box 42132
Lubbock, TX 79409-2132
United States

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