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Corporate Acquisition Programmes vs Standalone Deals: Comparative Study in the BRICS Countries

Student: Iuliia Ianzhimaeva

Supervisor: Elena Rogova

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Economics (Bachelor)

Final Grade: 9

Year of Graduation: 2020

The aim of this study is to compare the effectiveness of individual mergers and acquisitions and them as part of corporate programmes in the BRICS countries from 2008 to 2018. To achieve this goal, the tasks were set to test the hypothesis about the impact of the announcement of a transaction on the change in the share price of the acquiring company and to test the economic, informational and aggregate effects on the market capitalization during the implementation of a sequence of deals. The methodological basis were the event analysis for individual transactions and the Malatesta & Thompson regression model for analyzing several sequential deals. Positive statistically significant abnormal returns are observed, reaching maximum equal to 2.36% in the announcement day, and lower returns during five following days on the Chinese market. The maximum abnormal return was 0.63% on the first day after the takeover was announced in India. Corporate programmes perform better in Russia, where companies have been carrying out a sequence of acquisitions continuously for 11 years, and where the takeover increased firm’s market capitalization by 135 million rubles on average. Single deals outperform corporate programmes in China and India, while corporate programmes of Russian companies bring greater benefits to shareholders than standalone acquisitions for investors of Russian acquiring companies. In the case of Brazil, it is not possible to determine the advantage of one acquisition method over another. Mergers and acquisitions are not an effective investment tool for creating value in the South African stock market. The results of this paper will make a certain contribution to the study of the effectiveness of single deals and corporate programmes of mergers and acquisitions in the emerging markets of BRICS, and will also be useful for company’s managers and potential investors while choosing instruments for investments. Keywords: single deals, corporate mergers and acquisitions programmes, event study, abnormal returns, mergers and acquisitions

Full text (added May 18, 2020)

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