Finance Dissertation

Abstract

Mergers and acquisitions are often used for the enlargement of the business. It can bring about positivity as well as negativity to the financial as well as the operational side of the merging firms. Firms accept these composite deals with the anticipation to produce synergies, cost declines as a result of the bulk purchases, elimination of extra corporate staff, etc. Hypothetically, it is assumed that Mergers and Acquisitions increase the magnitude of the business; therefore, ultimately has a positive influence on Stockholders’ wealth; however, empirical research displays varied conclusions in this respect, with indications of various impacts of mergers and acquisitions on companies in different spans of time. This event study has evaluated the effect of a declaration of a merger on the share yields of the target company. Two hypotheses have been nominated in this regard. This empirical study uses various techniques to display that the market does not think through the mergers as significant information even if there is an outflow of facts on the subject of the merger of the Company before the declaration day that information effects have previously been similated in the rates of the target companies.