Case Study on Dmi Field Service Division

Topics: Stock market, Mergers and acquisitions Pages: 37 (7769 words) Published: February 11, 2011
The Effect of Mergers and Acquisitions on Shareholder Returns

Agus Sugiarto

Victoria Graduate School of Business Faculty of Business and Law

Victoria University of Technology Melbourne
2000

The Effect of Mergers and Acquisitions on Shareholder Returns

by

Agus Sugiarto
Bachelor of Law (Honours) University of Brawijaya Indonesia Master of Business Administration Royal Melbourne Institute of Technology Australia

A dissertation submitted to Victoria University of Technology in fulfilment of the requirements for the degree of Doctor of Business Administration

Victoria Graduate School of Business Faculty of Business and Law

Victoria University of Technology Melbourne
2000

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Table of Contents Page Table of Contents Abstract Declaration Acknowledgment List of Tables List of Illustrations ii vi vii viii x xiv

Chapter 1 Introduction 1.1. Background 1.2. The Hubris theory of mergers and acquisitions 1.3. Rationale of the present study 1.4. Definition of mergers and acquisitions 1.5. The objectives of the research 1.5.1. General objective 1.5.2. Specific objectives 1.6. Limitation of the research 1.7. Research method 1.8. Data 1.9. Organisation of the study Part One Literature Review Chapter 2 The Rationale for Mergers and Acquisitions 2.1. Introduction 2.2.The hypotheses of mergers and acquisitions 2.2.1. Value maximising hypothesis 2.2.2. Non-value maximising hypothesis 2.2.3. Managerial hypothesis 2.2.4. Inefficient management hypothesis 2.3. Summary Chapter 3 : Measurement and Empirical Evidence 15 16 17 18 19 20 20 9 10 10 11 12 13 14 I 2 3 5 5 5 6 6 7 7 7

Abnormal Return

3.1. Introduction 3.2.Event studies 3.2.1. The advantages of event studies 3.2.2. The drawbacks of event studies 3.3. Accounting numbers methodology 3.3.1. The advantages of accounting numbers 3.3.2. The drawbacks of accounting numbers ii

3.4. Empirical evidence en event studies 3.5. Empirical evidence on accounting numbers 3.6. Summary

22 28 31

Part Two Methodology
Chapter 4

Methodology 4.1. Introduction 4.2. The research model
4.2.1. Event studies method 4.2.2. Event time 4.2.3. Event window 4.2.4. The study models "

33 33
33 34 34 37

4.3. Data
4.3.1. Sources of data 4.3.2. Data characteristics 4.3.3. Data sample

40
40 41 42

4.4. Summary

43

Part Three Data Analysis and Empirical Findings
Chapter 5

The Regression Estimates and Statistical Tests 5.1. Introduction 5.2. Bidding firms 5.3. Target firms 5.4. The steps for computing abnormal returns 46 46 50 54

Chapter 6

The Abnormal Return After the Announcement of Mergers and Acquisitions 6.1. Introduction 6.2. The bidder's abnormal return 6.2.1. Market model 6.2.2. Market adjusted model

59 59
59 62

6.3. The target firms' abnormal return
6.3.1. Market model 6.3.2. Market adjusted model

66
66 69

6.4. Comparison of two models
6.4.1. The bidder's abnormal return 6.4.2. The target's abnormal return

73
73 76

6.5. Comparison of abnormal returns between bidding and target firms 6.5.1. Market model 6.5.2. Market adjusted model

79
79 83

6.6. Comparison with the previous studies iii

87

6.7. Summary 6.7.1. The application of the market model and the market adjusted model 6.7.2. The biddmg firm 6.7.3. The target firm 6.7.4. Comparison of bidding firms' and target firms' abnormal returns

89 89 89 90 90

Chapter 7 The Abnormal Return After the Outcome is Known 7.1. Introduction 7.2. The bidder's abnormal return 7.2.1. Market model 7.2.2. Market adjusted model 7.3. The target firms' abnormal return 7.3.1. Market model 7.3.2. Market adjusted model 7.4. Comparison of the abnormal returns of the two models 7.4.1. The bidder' s abnormal return 7.4.2. The target's abnormal return 7.5. Comparison of abnormal retums of the bidder and target firms 7.5.1. Market model 7.5.2. Market adjusted model 7.6. Comparison with...

References: Table 4.1. 4.2. 6.1. Total sample of mergers and acquisitions (1993-1997) Composition of the sample (1993-1997) The average abnormal retum of bidding 10 days prior to and 10 days after the announcement (Market model) firms
Page 44 44 61
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