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Value creation in evolving information industries : the effects of U.S. mergers

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Value creation in evolving information industries : the effects of U.S. mergers

Rhéaume, Louis (2000) Value creation in evolving information industries : the effects of U.S. mergers. Masters thesis, Concordia University.

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Abstract

This study investigates two main issues: (1) to what extent the level of relatedness among targets and bidders in the information industries affect the shareholder value of the bidders, and (2) what is the performance of related versus unrelated mergers in the information industries compared to what has been documented in the literature. We study the impact of diversification, whether related or not, in uncertain environments. We report interesting patterns by focusing on technologically converging industries for the three sectors comprising the information industries: information content, information appliances and information highways. Using a sample of 344 U.S. mergers for the period 1993 to 1997, we examine the stock market's response to these mergers in the information industries using the event study methodology. Thus, a short-term and long-term event study is undertaken to analyze the abnormal returns associated with those mergers. Inconsistent with the general literature, which found slightly negative or zero abnormal returns for the bidders in the short-term, we found some patterns of positive returns. However, consistent with prior research on the performance of related versus unrelated mergers, we found mixed results. Cross-sectional analysis shows that research and development expenditures on total assets (measure of technological uncertainty) are significantly negatively related in the short-run with abnormal returns, while they are positively related in the long-run with abnormal returns.

Divisions:Concordia University > John Molson School of Business
Item Type:Thesis (Masters)
Authors:Rhéaume, Louis
Pagination:viii, 91 leaves ; 29 cm.
Institution:Concordia University
Degree Name:Theses (M.Sc.Admin.)
Program:John Molson School of Business
Date:2000
Thesis Supervisor(s):Bhabra, Harjeet S.
ID Code:1189
Deposited By:Concordia University Libraries
Deposited On:27 Aug 2009 13:17
Last Modified:08 Dec 2010 10:19
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