The Impact of Merger and Acquisition Activities on Corporate Performance Measured on an Accounting and Market Base

Inhaltsverzeichnis (Table of Contents)

• Introduction
• 1 Problem and research question
• 1.1 Research design
• 1.2 Structure of the paper
• 2 Literature review
• 2.1 Market-based studies
• 2.2 Accounting-based studies
• 3 Transactions
• 3.1 Fundamentals of transactions
• 3.1.1 The M&A term and basic forms of transactions
• 3.1.2 The M&A process
• 3.1.3 Motives for M&A activities
• 3.2 Key drivers of M&A
• 3.2.1 Determinants by Datta, Pinches and Narayanan (1992)
• 3.2.2 Determinants by Hitt et al. (2012)
• 3.2.3 Further relevant drivers of M&A
• 3.2.4 The underlying determinants for the empirical study
• 3.3 Development of transaction markets
• 3.3.1 Reasons for M&A waves
• 3.3.2 Development of the global market of corporate control
• 3.3.3 The German transaction market
• 4 Methodologies
• 4.1 Market-based measurement
• 4.2 Accounting-based measurement
• 4.3 Strengths and weaknesses
• 5 Empirical investigation
• 5.1 Data sample and screening procedure
• 5.2 Hypotheses
• 6 Statistical analyses and results
• 6.1 Market-based approach: Short-term shareholder's return
• 6.1.1 Robustness
• 6.1.2 Bidding versus target companies
• 6.1.3 Univariate regression analysis
• 6.1.4 Multivariate regression analysis
• 6.2 Accounting-based approach: Long-term operating performance
• 6.2.1 Robustness
• 6.2.2 Bidding versus target companies
• 6.2.3 Univariate regression analysis
• 6.2.4 Multivariate regression analysis
• 6.3 Overall statement
• 7 Limitations and future outlook
• 8 Summary and conclusion

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This master's thesis investigates the impact of mergers and acquisitions (M&A) activities on corporate performance in the German market. The research aims to assess the short-term and long-term effects of M&A on both accounting and market-based performance metrics. Key themes explored in the study include:
• The impact of M&A on shareholder returns
• The relationship between M&A activity and firm profitability
• The role of various determinants in driving M&A activity
• The development of the global and German transaction markets
• The strengths and weaknesses of market-based and accounting-based performance measurement methods

Zusammenfassung der Kapitel (Chapter Summaries)

The introduction outlines the research question and aims of the study, focusing on the impact of M&A on corporate performance in the German market. It also details the structure of the paper, providing a roadmap for the reader. Chapter 2 presents a comprehensive literature review, examining existing studies that explore the relationship between M&A and firm performance. This chapter delves into both market-based and accounting-based studies, providing a foundation for the empirical investigation. Chapter 3 dives into the fundamentals of M&A transactions, exploring the M&A process, motivations for M&A activity, and key drivers of M&A transactions. The chapter also analyzes the development of the global and German transaction markets, highlighting significant trends and patterns. Chapter 4 outlines the methodologies employed in the study, detailing the market-based and accounting-based performance measurement approaches. It discusses the strengths and weaknesses of each approach, providing a framework for the empirical analysis. Chapter 5 presents the data sample and screening procedure used for the empirical investigation. It also outlines the specific hypotheses tested in the study. Chapter 6 presents the statistical analyses and results, examining the short-term and long-term effects of M&A on both market-based and accounting-based performance measures. This chapter analyzes the impact of M&A on shareholder returns, firm profitability, and the role of various determinants in driving M&A activity. Chapter 7 discusses the limitations of the study and potential areas for future research.

Schlüsselwörter (Keywords)

This study focuses on the impact of mergers and acquisitions (M&A) on corporate performance. The research primarily examines the German market, utilizing both market-based and accounting-based performance measures. Key concepts include: shareholder returns, firm profitability, M&A drivers, global and German transaction markets, and the strengths and weaknesses of different performance measurement methods.

Frequently Asked Questions

Do mergers and acquisitions (M&A) consistently improve corporate performance?

The research investigates this question by looking at both short-term market reactions and long-term accounting results, noting that while stock prices often rise upon announcement, long-term success is not guaranteed.

What is the difference between market-based and accounting-based performance measurement?

Market-based studies focus on stock price changes and shareholder returns around the deal announcement, while accounting-based studies analyze long-term financial data like profitability and ROE.

What are the primary motives for M&A activities?

Companies pursue M&A to generate future growth, achieve synergy effects (cost reductions, revenue enhancements), and gain tax advantages or market power.

How does the German M&A market differ from the US market?

Germany is characterized by more conservative accounting principles, a different corporate governance structure, and high regulation by the banking sector compared to the US.

What are "synergy effects" in a merger?

Synergies are benefits expected from combining two companies, such as reduced capital requirements, shared resources, and increased business growth leading to a higher combined value.