An assessment of the value creation of BRICS M&A deals in the European market before and after the financial crisis.
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2019-07-04
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en
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Abstract
This study examines the value effect of mergers and acquisitions of BRICS acquirers in the European market in the period before and after the credit crisis. Therefore, extending current literature with the examination of merger and acquisition theory’s from an emerging market perspective. This study is initiated by the findings of G. Alexandridis, Antypas, & Travlos (2018), that mergers and acquisition, after the crisis, tend to create more value than ever before. With the improvement of corporate governance practices, as one of the main reasons. The results of this study suggest that mergers and acquisitions performed by BRICS acquirers in the European market, before the crisis yielded an abnormal return of 1.4% and after the financial crisis an abnormal return of 1.69%. Indicating an improvement of 0.29%, relative to 0.21% improvement of another study which used a worldwide sample. However, the model does not predict that the improvement of corporate governance practices caused this effect. Which could be explained by the less developed institutional environment, the amount of monitoring and information disclosure, the legal quality, and the high degree of ownership concentration in the BRICS regions. Moreover, this study finds support for different firm specific factors on the performance of mergers and acquisitions (acquirer size, age of the firm, leverage ratio, and free cash flow).
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Faculteit der Managementwetenschappen