European Business Schools Librarian's Group

IESE Research Papers,
IESE Business School

No D/471: Value creation in European M&As.

Jose M. Campa () and Ignacio Hernando ()
Additional contact information
Jose M. Campa: IESE Business School, Postal: IESE Business School. Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Ignacio Hernando: Banco de España

Abstract: This paper looks at the value generated to shareholders by the announcement of mergers and acquisitions involving firms in the European Union. Target firm shareholders receive on average a statistically significant excess return of 9%. Acquirers' excess returns are null on average. Excess returns differ significantly depending on whether the merger involves two firms from the same European country or is a cross-border transaction. Cross-border transactions generate less total value than national mergers. Furthermore, when a cross-border merger occurs in an industry in which governments historically have been actively involved, the transaction results in a net destruction of value to shareholders.

Keywords: Cross-border mergers; shareholder returns; value creation; regulation

JEL-codes: G28; M10

31 pages, October 10, 2002

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