Module P58836 Literature review

Module: Financial research project P58836

Critical literature review on Mergers and Acquisitions

Lu Sun 13123963

Date: 7 April 2014

Contents

1. Abstract………………………………………………............3
2. Introduction………………………………………….............3
3. Literature review……………………………….……………4 3.1 The analysis performance of acquisition……………..5
3.11 Short-term analysis……………………………..5-6
3.12 Long-term analysis……………………………..6-8 3.2 Methodologies assessment…………………………..8-9 3.3 Real motivation for acquisition……………………....9-10
4. Conclusion…………………………………………..........10-11
5. References……………………………………….............12-17
6. Appendix…………………………………………………..18-19

1. Abstract

This paper provides a critical literature review on mergers and acquisitions activities over the past decades. In the short run, researches on the previous studies shows that there is insignificant increasing in shareholders’ value. Furthermore, the significant negative return was discovered to investors in the long run, even all of these are based on limited methodologies. Also, the real motivation for different types of takeover is discussed for which one is likely to increase shareholders’ value, and the method of payment is analyzed in terms of impact of investors’ value.

2. Introduction

Over the past decades, acquisition can be seen as an essential driven for entities’ strategic restructure and renewal (Jemison and Sitkin, 1986). A lot of efforts have been made by many scholars to conduct surveys on efficiency and advantages of acquisition. Some motives involved to carry out acquisition include to produce more benefits for directors (Meeks et al., 1977), to improve cost efficient as redundancy of multifunction departments by gaining synergy and to make current market share enlargeable so that creating more market value, eventually, to lead shareholders to maximize their value (Salter and Weinhold, 1979). Nevertheless, there are many academic papers hold an apposed view on this subject such as

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