Abstract

This study examines the market impact of mergers and acquisitions of TSE-listed firms, and the relationship between market impact and merger partner characteristics, such as method of payment and the intensity of merger activity. The thesis also examines the impact of cross-border transactions on TSE-listed firms. The evidence suggests that cash offers generate consistently higher abnormal returns, higher trading activity, and lower bid-ask spreads around the announcement of takeovers than do stock exchange offers. The difference between cash and stock exchange offers is explained by capital gains tax liabilities and the information asymmetry associated with the method of payment. The intensity of merger activity also impacts the abnormal returns and the bid-ask spreads around the announcement dates. Finally, the evidence suggests that the announcement of cross-border transactions has a strong market impact.