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

See all articles by Antonios Antoniou

Antonios Antoniou

Wealth Associates

Philippe Arbour

Lloyds TSB Corporate Markets

Huainan Zhao

Loughborough University - School of Business and Economics

Date Written: March 2011

Abstract

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

Antoniou, Antonios and Arbour, Philippe and Zhao, Huainan, Measuring the Economic Gains of Mergers and Acquisitions: Is it Time for a Change? (March 2011). Available at SSRN: https://ssrn.com/abstract=579841 or http://dx.doi.org/10.2139/ssrn.579841

Antonios Antoniou

Wealth Associates ( email )

Alpine House,
Honeypot Lane
London, NW9 9RX
United Kingdom

Philippe Arbour

Lloyds TSB Corporate Markets ( email )

London
United Kingdom

Huainan Zhao (Contact Author)

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

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