Year of Graduation
Evaluation on the Effectiveness of International Mergers and Acquisitions in BRICS Countries
Investigation of the effectiveness of cross-border mergers and acquisitions with the participation of companies from emerging countries has gained much popularity with a tendency to globalization and shift of activity of the market of corporate control towards developing countries in recent years. Unlike the majority of the existing works, which are not carrying out differentiation on the target markets at transactions, the current research is focused on studying of an exit of the companies from developing countries on the developed capital markets. The work proposes the analysis of cross-border M&A, initiated by companies from BRICS countries in 2004-2015 and directed to an entry of those companies to developed markets of North America, Western Europe and Australia. By results of an estimation of effectiveness of 153 M&A by means of a cumulative abnormal returns method the conclusion is drawn that on average transactions create value for shareholders of the buying companies, despite quantitative prevalence of inefficient transactions in selection. The only country for which destruction of value on each of the considered event windows has been recorded is Brazil. Significant influence on effectiveness of merges and acquisitions is rendered by the following factors: size of the buying companies, financial efficiency of the buying companies and relative size of the target companies.