Acquirer gains in European acquisitions

Abstract

In this thesis I follow up a recent mergers and acquisitions (M&A) study (Alexandridis et al., 2017) that documents findings which challenge mainstream M&A theory. The results of said study suggest that, in the last few years, acquiring firms actually gain value (in terms of stock prices) as a result of an acquisition. I expand this study about acquirer returns resulting from acquisitions by examining this phenomenon in a European setting. Therefore I examine whether these positive acquirer stock returns can be found in European acquisitions, and as well try to find the cause of this sudden change in acquisition performance. Firstly, I hypothesize that in my European firm sample there are positive significant acquirer stock/shareholder returns as a result of acquisition activities. I hypothesize secondly that, following the results and findings of this prior research, improved corporate governance structures have led to better decision-making and ultimately higher acquirer returns related to acquisitions. The results of the empirical analysis suggest that indeed European acquirers earn significant and abnormal stock returns resulting from an acquisition, measured over a multi-month timeframe. However, there seems to be no evidence that better corporate governance structures lead to significantly higher stock returns for acquiring firms.