1. Managers continue to acquire and merge despite empirical evidence that M&A destroy or at best do not create value for acquiring firm shareholders. Using the extant academic literature, critically evaluate theories explaining motives for M&A and empirical evidence on the impact of M&A on shareholders’ wealth.
The coursework must be well presented and sources must be cited. The references should follow the Harvard referencing style. Please note that you must rely on academic studies published in journals such as Journal of Finance, Journal of Financial Economics and Review of Financial Studies. Articles in, for example, Investopedia or Financial Times are not academic papers. You should aim to review at least 20 papers. However, how the papers are reviewed is more important than the number of the papers being reviewed.
2. Using the Bloomberg terminal, download a random sample of at least 10 M&A deals announced by FTSE350 constituent firms before 31 December 2019. Provide brief background to deals focusing on deal and firm level characteristics. Analyse why and how firms in the sample made the decision to acquire, applying the knowledge of module content. You should demonstrate that you understand topics covered in the module.
Using the event study methodology, examine the market reaction to the deals. Clearly describe your calculation, including how returns are calculated and what market index is used. Briefly discuss your findings, for example explain key statistics, differences/variations between returns, etc. Compare your results with evidence reported in extant research. Discuss any limitations of your analysis.
Event Studies in Economics and Finance Author(s): A. Craig MacKinlay Source: Journal of Economic Literature , Mar., 1997, Vol. 35, No. 1 (Mar., 1997), pp. 13- 39 Published by: American Economic Association Stable URL: https://www.jstor.org/stable/2729691
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