Mergers & Acquisitions and Stock Returns in the US Technology, Media & Telecommunications Sector. How the Impact Has Changed Over Time

Table of Contents

1 Introduction

2 Literature Review

3 Data & Methodologies

3.1 Data

3.2 Methodology

3.2.1 General Setup

3.2.2 Estimation of Expected Returns

3.2.3 Estimation of Abnormal Returns

3.2.4 Testing of Hypotheses

4 Empirical Results

5 Discussion and Interpretation

5.1 Setup

5.2 Acquiring Shareholders

5.3 Target Shareholders

6 Conclusion

Research Objectives and Topics

This thesis investigates the impact of merger and acquisition (M&A) deal announcements on the wealth of shareholders in the U.S. Technology, Media & Telecommunications (TMT) sector. By conducting an event study across three distinct time frames between 2000 and 2019, the research aims to determine whether observed market-wide trends in cumulative abnormal returns (CARs) are present within this specific industry and how they have evolved over time, particularly for "mega-deals".

• Analysis of shareholder wealth effects (CARs) for acquiring and target companies in the U.S. TMT sector.
• Evaluation of "mega-deals" (transaction values USD 500m+) and their influence on stock returns.
• Application of the event study methodology to compare pre-GFC, post-GFC, and post-post-GFC periods.
• Investigation into the influence of regulatory changes, corporate governance, and synergy expectations on M&A performance.

Excerpt from the Book

Summary of Chapters

1 Introduction: Introduces the research question regarding the wealth effects of M&As on shareholders and outlines the thesis's focus on the U.S. TMT sector across three time periods.

2 Literature Review: Provides a comprehensive overview of historical and contemporary corporate finance literature concerning the impact of M&A announcements on stock returns.

3 Data & Methodologies: Details the criteria for the selected deal sample and explains the event study methodology, including the market model and hypothesis testing framework.

4 Empirical Results: Presents the calculated CARs and the statistical significance of the findings for acquiring and target firms across the analyzed time frames.

5 Discussion and Interpretation: Analyzes the empirical results, exploring potential explanations such as synergy expectations, competition, and corporate governance reforms.

6 Conclusion: Summarizes the key findings and contributions of the thesis, noting that post-GFC trends in the TMT sector partially diverge from broader market observations.

Keywords

Mergers and Acquisitions, M&A, TMT Sector, Corporate Finance, Stock Returns, Abnormal Returns, AR, Cumulative Abnormal Returns, CAR, Event Study, Mega-deals, Great Financial Crisis, GFC, Market Efficiency, Shareholder Wealth.

Frequently Asked Questions

What is the primary subject of this academic work?

The work examines the impact of M&A deal announcements on the stock returns of acquiring and target firms within the U.S. Technology, Media & Telecommunications (TMT) sector.

What are the core thematic fields covered?

The research focuses on corporate finance, specifically shareholder value creation, market efficiency, the impact of M&A mega-deals, and the influence of governance reforms.

What is the central research goal or question?

The goal is to investigate whether observed trends in cumulative abnormal returns (CARs) following M&A announcements, seen in the broader market post-GFC, are also applicable to the U.S. TMT industry over three distinct time periods.

Which scientific methodology is utilized?

The research employs an event study methodology as defined by MacKinlay (1997), using the market model to calculate abnormal returns and testing significance via standardized abnormal returns and CARs.

What topics are discussed in the main body?

The main body covers the selection of data, the methodological setup for calculating abnormal returns, empirical results for three time frames, and a detailed discussion interpreting these results through the lens of synergy expectations and regulatory impacts.

Which keywords best describe this study?

Key terms include M&A, TMT sector, event study, CARs, mega-deals, corporate governance, and shareholder wealth.

How does the TMT sector differ from the broader market in terms of M&A returns?

The findings suggest that the U.S. TMT sector shows unique characteristics where acquiring shareholders experience positive CARs in the post-post-GFC period, contradicting broader research that indicates a return to negative levels.

What role does the "mega-deal" classification play in the analysis?

Mega-deals (USD 500m+) are the primary focus because they historically represent a significant portion of M&A activity and have been shown in prior research to exhibit the most pronounced CAR shifts.