Does size really matter? in mergers of equals : an event study

Abstract

This research presents empirical studies on the impact of mergers of equals on shareholders’ wealth. Due to integration problems between combining corporations, Daimler-Chrysler merger failures caused the corporate sector to think that mergers of equals erode shareholder wealth. However, it is based on a small proportion of MOE transactions, and there is no empirical evidence on the shareholder’s return on the announcement date implications of MOEs related to the size of the merger. I provide this research knowledge for the shareholder wealth at the announcement date for the implications of MOEs related to the size effect of the merger.

Furthermore, MOE characteristics associated with shareholder wealth impacts are evaluated to assess MOEs. Two tests will be used to determine the optimal structure of MOE transactions: i) small-size and large-size MOEs – to determine whether the merger abnormal return is determined by the size of the acquirer and target firms. ii) local and cross-border MOEs – to determine whether local or cross-border mergers outperformed in terms of abnormal returns at announcement date in MOE transactions.