企業倂合의 成果에 관한 實證的 硏究

Abstract

Mergers and acquisitions (M&A) are a response to new technologies and market conditions which require strategic change in a company's direction or use of resources. Economic analysis and evidence indicate that mergers and acquisitions are playing an important role in helping the economy adjust to major competitive changes. M&A enables vast economic resources to move quickly to their value improving use. A merger refers to the complete absorption of one firm by another. The acquiring firm retains its name and its identity, and it acquires all of the assets and liabilities of the acquired firm. After a merger, the acquired firm ceases to exist as a separate business entity. A second way to acquire another firm is to simply purchase the firm's voting stock in exchange for cash, shares of stock, or other securities. Whether it is a merger or acquisition, we use the term M&A referring to the transfer of control of a firm from one group of shareholders to another. There are two classes of acquisition theories. The first refers to non-value maximizing behavior by the management of acquiring firms. Acquisitions are attemps to maximize growth in sales or assets or to control a large empire. Acquisitions of this type have no economic gains to be divided among the companies and given the costs of negotiating and the potential problems of coordination of the expanding corporate empire, it is likely that there would be an overall economic loss. The second general class of theories refers to value maximization motivations in which the acquisition should meet the same criteria as any other investment decision. Thus there should be a positive expected economic gain from the acquisition and depending on the competitiveness of the acquisition market, some proportion of the economic gain will accrue to the target firm's shareholders. Regardless of this state of competition, the acquiring firm should at least earn a normal rate of return. This thesis, 'Wealth Effects of Mergers and acquisitions', deals with gains and losses of the shareholders. In Korea, M&A is not so active as in other countries, especially USA. However, M&A is becoming a major issue for corporate restructuring. Many of the Korean M&A are friendly takeovers consolidating companies within the same business conglomerate. Also, M&A activities in Korea are the result of industrial policy of the government. Thus, the wealth effects of M&A in Korea may have different results compared to those of other countries. The thesis employ event study methodology to examine the wealth effects. The thesis examine 89 bidding firms which engaged the M&A activity during the period of 1985-1995. The sample is divided depending on the period of the activity to see if the results may have been influenced by the overall environment of the market. The effect of conglomerate or other types of merger are also studied. The results do not show that the bidding firm shareholders earn significant gains when the company is involved in M&A activities.