Short-term Value Creation from M&A Announcements in the Nordic Market

Ali Jahouh & Stella Tan

Student thesis: Master thesis


The aim of this thesis is to investigate whether there has been a short-term value creation from M&A announcements in the Nordic market from 2000 to 2019. Several academic papers have been con-ducted in the U.S., UK and Europe, but only limited empirical evidence exists in the Nordic market. The historical M&A activity level shows a clear trend that M&A has become a popular and recognized method of firms to grow. The main driver of value creation in M&As is synergies cf. neoclassical theory, whereas behavioural theory aspects, such as agency problems, managerial hubris, signalling-, and leverage effect may destroy shareholder wealth. By extension, neoclassical- and behavioural theory disagree on the efficiency of markets. This paper’s findings show abnormal return to target shareholders in the days after the M&A announcement, which indicates that the market does not efficiently absorb all information immediately. Moreover, abnormal return to target shareholders in the days prior to the M&A announcement, demonstrates that the share prices reflect information that is not yet publicly available, which contradicts the semi-strong market efficiency. Therefore, this paper argues that the Nordic market lies in a grey-zone between semi-strong and strong market efficiency. Finally, it is concluded that M&A announcements in the Nordic market from 2000 to 2019 have resulted in average short-term abnormal return of 25.3% to target shareholders based on 144 M&A transactions, whereas the empirical evidence for acquirer shareholders is limited.

EducationsMSc in Accounting, Strategy and Control, (Graduate Programme) Final ThesisMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2020
Number of pages119
SupervisorsSvend Peter Malmkjær