How M&A Deals Influence Corporate Performance in Developed and Emerging Capital Markets: A Review of Empirical Results in the Literature
This chapter surveys the recent trends in the literature on the performance of M&A deals in developed and emerging capital markets. This literature is voluminous, diverse and challenging. We focus on the transactions within one country – domestic M&As – in particular focusing on the methods that the researchers use to estimate whether M&A deals promote efficiency gains or not. We discuss the research instruments which allow an assessment of the effects of M&As on firm operating performance and on firm value. Analysing the results of latest empirical studies we reveal that target shareholders gain significantly in M&A deals. The evidence suggests that in most cases acquiring shareholders receive negative or insignificant returns in the short-run in developed capital markets, while in emerging economies acquiring shareholders mostly gain in M&A deals. Operating performance analysis reveals mixed results in developed and emerging capital markets, while the analysis of papers which use value performance indicators show the destruction of company value due to M&As in developed and emerging capital markets. The review also analyses studies that examine the relationship between different methods.