The Merging Premium and The Merger's Ex-Post Performance
This study conducts regression analysis on 583 M&A (Merger and Acquisition) events that occurred during 1983 and 2011 but still preserved data integrity. This study aims to investigate the influence of the premiums from the M&A on business performance of the Acquiring Company. The SROA and the SEPS are considered the dependent variables, whereas the PRE and the DM are considered the main control variables. Meanwhile, other control variables such as the LNTA, the LEV, the PMY, the M/B, and the CFR are also added for analysis. In terms of the main control variables, the PRE and the DM are both positively correlated with the two dependent variables such as the SROA and the SEPS, and that indicates that even with the popularity of M&A for the target company at premiums in Taiwan, the acquiring company can also effectively evaluate the M&A costs and future benefits to obtain successful mergers and acquisitions that may be helpful to the future business performance of the company. Meanwhile, with the high industry concentration in Taiwan, relevant mergers and acquisitions are far more frequent than non-relevant mergers and acquisitions. Therefore, a company will want more corporate values and synergies to be created from strategy-based mergers and acquisitions, which causes the cross multiply of the PRE and the DM to be significantly in positive correlation with the SROA and the SEPS. The research results indicate that relevant mergers and acquisitions are far more able to improve the business performance of the acquiring company than non-relevant mergers and acquisitions, which is consistent with the results concluded by previous researchers. In terms of other control variables, the research results indicate that the larger the LNTA, the lower the costs of distributing debts and liabilities and information disclosure. The larger M/B indicates that the high stock price of the company will help fund-raising in the public market, which makes it easier for the benefits to exceed the costs. The larger CFR indicates that the financial conditions of the acquiring company are good and stable. The research results indicate that the 3 indicators are positively correlated with the SROA and the SEPS. The larger LEV indicates that the insolvency of the acquiring company in the future. The research results are consistent with the results concluded by previous researchers as they indicate that the higher debt ratio can lower the business performance of the company.
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