Anchoring in Mergers & Acquisitions

Inhaltsverzeichnis (Table of Contents)

• 1 Introduction
  • 1.1 Objective and Contribution
  • 1.2 Research Methodology
  • 1.3 Main Findings
  • 1.4 Limitations
  • 1.5 Structure of the Study
• 2 Literature Review
  • 2.1 Traditional Merger Theory
  • 2.2 Behavioral Merger Theory
  • 2.3 Reference Point Thinking
    • 2.3.1 Theory
    • 2.3.2 Anchoring in Economics and Finance
    • 2.3.3 Anchoring in Mergers and Acquisitions
• 3 Hypotheses
• 4 Sample Composition and Methods
  • 4.1 Dataset
  • 4.2 Definition of Variables
  • 4.3 Methods
    • 4.3.1 Winsorization
    • 4.3.2 Linear Regression
    • 4.3.3 Gaussian Kernel Regression
    • 4.3.4 Piecewise Linear Regression
    • 4.3.5 Probit Regression
  • 4.4 Descriptive Statistics
• 5 Results and Findings
  • 5.1 Reference Pricing in Takeover Bids
    • 5.1.1 Linear Analysis
    • 5.1.2 Non-linear Effects
    • 5.1.3 Robustness Checks
  • 5.2 Takeover Success and the Adjustment of Takeover Pricing
    • 5.2.1 Reference Prices and Deal Success
    • 5.2.2 Reference Prices and Offer Adjustment
    • 5.2.3 Robustness Checks
  • 5.3 Discussion of Findings
  • 5.4 Limitation of Results
• 6 Summary and Perspectives

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This research explores the impact of reference points on bidder and target behavior in mergers and acquisitions (M&A) within the European market, primarily focusing on the UK. The study aims to analyze whether historic peak prices serve as anchor values influencing bid prices and takeover success rates.

• Reference point theory in M&A
• Anchoring effect in financial decision-making
• Impact of historic peak prices on bid prices
• Relationship between reference points and takeover success
• Application of behavioral finance principles to M&A

Zusammenfassung der Kapitel (Chapter Summaries)

• Chapter 1 provides an introduction to the research, outlining the objective, research methodology, main findings, limitations, and structure of the study.
• Chapter 2 reviews existing literature on traditional and behavioral merger theory, with a particular focus on reference point thinking and its application to economics and finance, including M&A.
• Chapter 3 presents the hypotheses formulated based on the literature review, exploring the impact of reference points on bid prices and takeover success.
• Chapter 4 details the dataset used in the study, defining key variables and outlining the methodological approach, including various regression techniques and descriptive statistics.
• Chapter 5 presents the results of the analysis, examining the influence of reference prices on takeover bids, exploring both linear and non-linear effects, and assessing the relationship between reference points and deal success. Robustness checks are also conducted to ensure the reliability of the findings.

Schlüsselwörter (Keywords)

This research examines the application of reference point theory and the anchoring effect in mergers and acquisitions. It analyzes the influence of historic peak prices on bid prices and takeover success in the UK and European market, utilizing various regression techniques and a comprehensive dataset of takeover bids. Key concepts explored include behavioral finance, M&A decision-making, bid price determination, takeover success, and empirical analysis.