Open Access

Tobias Schneider

• This Bachelor Thesis aims to review previous studies in the broad field of M&A. It assesses whether M&A activities are beneficial for shareholders in terms of their returns. Effects on shareholder wealth, both in the short- and long-run, will be evaluated within this thesis. For this purpose, a large data set covering a time horizon of 64 years starting in 1950 until 2014 is used in the short-run. The long-run period involves 81 years lasting from 1929 to 2010. After an overall comparison, taking into account all takeover deals, a more detailed analysis of the announcement effects of M&As considering several different takeover characteristics will be executed. In the short-run, returns for bidder, target and combined firms’ shareholders are considered. For long-run shareholders’ wealth, data only for bidder firms will be evaluated. The results show that shareholders of target, bidder and combined firms earn significantly positive returns upon the announcement of M&As. Most gains however accrue to target firms’ shareholders. Long-run returns to bidder firms’ shareholders seem to be negative across all three event windows. The longer the event windows, the more negative returns to shareholders. The results also demonstrate that takeover characteristics can significantly influence shareholder wealth. Furthermore, this thesis aims to address following research questions: (1) what drives M&A activity and what are the individual motives for M&A decisions? And (2) how do several takeover characteristics impact the outcome of M&As?