Stock Exchange’s Control Premium in Mergers and Acquisitions
Date Issued
2011
Date
2011
Author(s)
Yu, Liao, Guan
Abstract
Few researchers focus on stock exchange’s mergers and acquisitions. Furthermore, most of them emphasize the relationships of merger synergies and abnormal returns. Few of them study the merger premiums. We apply the multiple regressions on 39 stock exchange’s mergers and acquisitions from 1996 to 2011 to investigate the merger premiums.
The finding of descriptive statistics suggests the merger premiums of stock exchanges are lower than general firms. Bidding stock exchanges pay more premiums if they pay with cash, instead of stock, to target stock exchanges. Bidding stock exchanges bought shares of target stock exchanges in stages. Target stock exchanges reserve part of control over bidding stock exchanges after mergers and acquisitions. The sizes of bidding stock exchanges are larger than target stock exchanges’ sizes measured in book or market value of equity.
The finding of multiple regressions suggests that merger premiums will be higher if bidding stock exchanges pay with cash, instead of stock, to target stock exchanges. However, this finding is sensitive to different proxies of merger premiums and stock exchange’s sizes.
Subjects
stock exchange
mergers and acquisitions
control
premium
Type
thesis
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