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Do Korean Mergers Create Value for Shareholders? : Evidence from mergers between public firms

  • Suna Kim (김선아, 대학원 경영학과 재무금융)

초록/요약

This paper examines the market reaction and its determinants from mergers between listed firms in Korea. The sample contains 54 mergers between listed firms from 2000 to 2022 based on the SDC Platinum database. We examine the percent and won returns of bidders and targets, also the value-weighted synergy returns. Both percent and won returns of bidders and targets are significantly positive and the bidder return is significantly higher than that of the target. We find that the target firms with a high pre-merger run-up of bidder and target have significantly lower merger announcement returns. This result suggests that if the target or bidder is likely to be overvalued, the market tends to react negatively to the target’s merger announcement. Moreover, we find bidder firms whose controlling shareholders’ ownership of their target firm is higher, tend to have lower merger announcement returns. However, we find that there is no significant evidence that chaebol-affiliated mergers have lower CARs.

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목차

I. Introduction………………………………………………...……...…………….………….……1
II. Data and Methodology………………………………………………….…………….……….…6
1. Sample………………………………………………………………………………...………6
2. Definition……………………………………………………………..……………………….6
3. Summary statistics…………………………………………………………..………………...9
III. Empirical results…………………………………………………………………...……….…….9
1. Abnormal percentage and won returns………………………………………….……..............9
2. Abnormal percentage and won returns by affiliations between bidder and targets……….….11
3. Determinants of merger announcement returns…………………………………….………...13
IV. Conclusion…………………………………………………………………………………..…...15
References………………………………………………………………………………….…………18
Appendix…………………….………...…………………………………………………………...…2

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