Post merger profitability analysis of shareholders. Evidence from ...

Chapter 1: Introduction
In combination with other trends, such as privatisation and
deregulation of financial markets, a large and accelerating process
of consolidation of public listed firms has taken place in Europe
during the last decade. Analysing investment decisions reveals that
the largest investment decisions that most firms make are
acquisitions of other firms.
Figure 1 illustrates the strong growth of major European
acquisitions during the last decade. According to the Securities Data
Corporation, comparing US deals and European deals reveals that
US acquisition activity is of larger frequency. However, the amount
of deals in Europe more than tripled from 1995 to 2000 whereas in
the US the amount of deals grew more slowly.
Figure 1 Major European US and deals
Conclusions of post-merger stock performance are that there is
evidence that the majority of M&As are unsuccessful. However,
what minimizes the explanatory power of the bulk of the studies is
7