The Impact of Industry Competition and Merger Types On the Performance of Mergers and Acquisitions

• Main Authors: Yi-Wen Hung, 洪怡玟
• Other Authors: Cheng-Yi Shiu
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/54314893037825248016

碩士 === 國立中央大學 === 財務金融學系 === 105 === Given industry competition is regarded as one of the external corporate governance mechanism, this study analyzes the impact of industry competition, a natural exogenous variable, on the performance of mergers and acquisitions (M&As). We find that acquirers in competitive industries experience significantly higher abnormal announcement return than those in noncompetitive industries. This result indicates that industry competition has a disciplinary effect on managerial slacks and prevents managers from empire-building acquisitions that are detrimental to shareholder value. In addition, acquirers in competitive industries prefer horizontal acquisitions, which can effectively mitigate industry competition, and such type of deals experiences significantly higher abnormal return than benchmarks. Acquirers in competitive industries also prefer conglomerate acquisitions, but this type of acquisition suffers a significantly negative announcement returns. On the other hand, acquirers in unique industries can strengthen their bargaining power and increase barriers to entry by engaging in vertical acquisitions. However, the announcement returns on such type of deals are insignificantly positive.