Title: Revenue enhancement and wealth effects of mergers and acquisitions in Asian emerging markets

Authors: Jianyu Ma, Jose A. Pagan, Yun Chu

Addresses: School of Business, Robert Morris University, Moon Township, PA 15108, USA. ' School of Public Health, University of North Texas Health Science Center, Fort Worth, TX 76107, USA. ' School of Business, Robert Morris University, Moon Township, PA 15108, USA

Abstract: Revenue enhancement and value creation are core issues of mergers and acquisitions (M&A). Revenue enhancing synergy associated with cross-industry M&A is supported by Asian emerging markets. Both within-industry M&A and cross-industry M&A deals realise significant positive abnormal returns. The difference between the two categories of M&A is statistically significant in a three-day window, but not statistically significant in a two-day window. Information leakages may be driving the larger valuation effects because a three-day window includes one day before the announcement date. Since large firms tend to diversify their business, the result that cross-industry M&A deals realise lower abnormal returns than within-industry may be driven by the firm size effect.

Keywords: revenue enhancement; company acquisitions; abnormal returns; SIC; Standard Industry Code; Standard Industrial Classification; wealth; Asia; emerging markets; value creation; within-industry mergers; cross-industry mergers; statistical significance; information leakages; valuation effects; firm size; merger announcements; Indonesia; Thailand; Singapore; Philippines; Malaysia; India; Taiwan; South Korea; Hong Kong; China; revenue management.

DOI: 10.1504/IJRM.2010.033022

International Journal of Revenue Management, 2010 Vol.4 No.2, pp.179 - 194

Published online: 06 May 2010 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article