Measuring the Economic Gains of Mergers and Acquisitions: Is it Time for a Change?
24 Pages Posted: 22 Aug 2004 Last revised: 14 Mar 2011
Date Written: March 2011
In this paper we review the methods of measuring the economic gains of mergers and acquisitions (M&A). We show that the widely employed event study methodology, whether for short or long event windows, has failed to provide meaningful insight and usable lessons regarding the central question of whether mergers and acquisitions create value. We believe the right way to assess the success and therefore the desirability of M&A is through a thorough analysis of company fundamentals. This will require examining smaller samples of transactions with similar characteristics.
Keywords: Mergers & Acquisitions, Takeovers, Wealth Effect, Value Creation, Event Study, Fundamental Analysis
JEL Classification: G14, G34
Suggested Citation: Suggested Citation