Title: Investigating the critical parameters to determine the revenue of mergers and acquisitions to target-companies in Europe

Authors: Ioannis A. Tampakoudis, Demetres N. Subeniotis, Efpraxia Dalakiouridou

Addresses: Department of Accounting and Finance, University of Macedonia, Thessaloniki 540 06, Greece. ' Department of Business Administration, University of Macedonia, Thessaloniki 540 06, Greece. ' University of Macedonia, Thessaloniki 540 06, Greece

Abstract: This paper analyses the wealth effects of mergers and acquisitions in Europe over the past 60 years. We review a number of empirical studies to test several theoretical hypotheses regarding the revenue accruing to target-companies| shareholders. We tend to confirm the positive nature of the activity, nevertheless the results vary significantly among the European countries. The UK target-companies obtain the higher revenue in Europe, since the market-oriented system allows the operation of a competitive market for corporate control. Tender offers and the competition among bidder-companies positively affect the abnormal returns, while the nationality of bidder-companies and the final outcome of the pending merger have no influence on the results. The efficient market hypothesis is evidently violated in Continental Europe, considering the upward drift of the returns up to the announcement date. Indeed, the European capital markets are segmented, while the market for corporate control in Continental Europe seems to be immature and underdeveloped.

Keywords: mergers; acquisitions; efficient markets; market structures; critical parameters; target-companies; Europe; wealth effects; shareholders; UK; United Kingdom; market-oriented systems; competitive markets; competitiveness; corporate control; tender offers; competition; bidder-companies; abnormal returns; company nationality; capital markets; immature markets; underdeveloped markets; revenue management.

DOI: 10.1504/IJRM.2011.038618

International Journal of Revenue Management, 2011 Vol.5 No.1, pp.42 - 62

Available online: 15 Feb 2011 *

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