Value Creation through Mergers & Acquisitions in Europe: A Quantitative Event Study of Firm Specific Factors

Kristoffer Kærgård Kaspersen & Nikolaj Jepsen

Student thesis: Master thesis


Most M&A research is built upon studies involving small sample sizes. This thesis aims to examine, whether a quantitative study based on a larger sample size, could show statistically significant abnormal returns for a bidding firms’ shareholders at the announcement of an M&A deal. Additionally, the thesis examined the value creating properties of several variables and financial indicators, which in the common M&A literature have been assumed to be value creating factors. The thesis is focused specifically on M&A deals in Europe in the period between the years 2003-2018 which contains two merger waves surrounding a global recession. Given the fact that the majority of research is based on data from the United States, the thesis seeks to examine the lesser researched market in Europe. The sample size of 6279 observations has been used for statistical tests along with regressions to identify whether abnormal returns could be observed and whether the factors identified by the literature had any statistically significant effect on the abnormal return. The analysis is performed using an event study methodology as is prevalent in previous quantitative studies. The analysis showed that the analysis-period contained statistically significant abnormal returns for the bidding firms’ shareholders upon the announcement of an M&A deal. Furthermore, the analysis provided statistically significant results for the variables return on equity, EV/EBITDA and acquirer Q-ratio in line with what was expected by the literature. Contrarily, the variable for final considerations structure showed statistically significant results against what was expected. Several other variables showed indications of specific results but without statistical significance. Lastly some variables showed ambiguous results with low statistical significance.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2019
Number of pages152