International Corporate Strategic Alliances: Mergers & Acquisitions and Financial Value Creation
Keywords:
business combinations; business alliances; acquisition; merger; financial value; financial restructuring; corporate financeAbstract
Mergers and acquisitions are important financial and economic strategic alliance tools of the modern corporation. Objective: this paper aims to analyse the value creation implication from global strategic mergers and acquisitions. Prior work: the paper inclines on the synergy theory of mergers and acquisitions. Method: reliant on the synergy theory, the paper is quantitative to examine the effectiveness of the number of global alliances on the financial value from mergers and acquisitions. Data were collected from the Institute for Mergers, Acquisitions and Alliances for thirty-nine years (1985 - 2023). The data were analysed with the aid of OLS regression statistics. Results: tested at an alpha value of 0.05, the results show positive and significant effect at a p-value of P<0.0001, which confirms that global mergers and acquisitions produce a highly significant and positive financial value even after a long-term period of thirty-nine years. Implication: the paper has implication for business executives on the value of international alliance; and for business schools as a case that bolsters the synergy theory of merger and paves a new agenda for future research. Value: the paper applies a unique model by using global data on strategic alliances for an extended period of over three decades and debunks uncertainties in research to show that mergers and acquisitions can produce significant financial value into the future when done rightly, which is across international boundaries.
References
Akhtar, M.W.; Khan, F.A.; Shahid, A. & Ahmad, J. (2016). Effects of Debt on Value of a Firm. Journal of Accounting & Marketing, 5(4), pp. 1-4.
Alexandridis, G.; Antypas, N. & Travlos, N. (2017). Value creation from M&As: New evidence. Journal of Corporate Finance, 45, pp. 632-650.
Benchmark (2019) Benefits of International Mergers and Acquisitions. Retrieved from, https://blog.benchmarkcorporate.com/3-benefits-of-international-mergers-and-acquisitions#:~:text=International%20expansion%20allows%20access%20to,starting%20a%20business%20from%20scratchdate: 02.15.2024.
Bhattacharya, M. & Biswas, S. (2021). Mergers & Acquisitions and Value Creation: A Banking Industry Perspective. IUP Journal of Accounting Research & Audit Practices, 20(4), pp. 32–46.
Bianconi, M. & Tan, C.M. (2019). Evaluating the instantaneous and medium-run impact of mergers and acquisitions on firm values. International Review of Economics & Finance, 59, pp. 71-87.
Campa, J.M. & Hernando, I. (2004). Shareholder value creation in European M&As. European financial management, 10(1), pp. 47-81.
Fich, E.M.; Nguyen, T. & Officer, M. (2018). Large wealth creation in mergers and acquisitions. Financial Management, 47(4), pp. 953-991.
Global-E (2021). Benefits of mergers and acquisitions. Retrieved from https://www.globalexpansion.com/blog/benefits-of-mergers-and-acquisitions, date: 02.15.2024.
Grave, K.; Vardiabasis, D. & Yavas, B. (2012). The global financial crisis and M&A. International Journal of Business and Management, 7(11), pp. 56–66.
Hazelkorn, T.; Zenner, M. & Shivdasani, A. (2004). Creating value with mergers and acquisitions. Journal of Applied Corporate Finance, 16(2‐3), pp. 81-90.
IMAA (2024). M&A Statistics. Retrieved from, https://imaa-institute.org/mergers-and-acquisitions-statistics/ date: 02.18.2024.
Kang, N.H. & Sakai, K. (2000). International strategic alliances: Their role in industrial globalisation. OECD Science, Technology and Industry Working Papers.
Malmström, C.G. (2011). Understanding Mergers & Acquisition – Financial Decision Making. Retrieved fromhttp://accioneduca.org/admin/archivos/clases/material/mergers-and-acquisition_1564415367.pdf, date: 02.15.2024.
Mamaro, L.P. & Legotlo, T.G. (2020). The impact of debt financing on financial performance: Evidence from Retail firms listed on Jse. The Journal of Accounting and Management, 10(3), pp. 23 – 33.
Pekár, Jr. P. & Margulis, M.S. (2003). Equity alliances take centre stage. Business Strategy Review, 14(2), pp. 50-62.
Rahman, M. & Lambkin, M. (2015). Creating or destroying value through mergers and acquisitions: A marketing perspective. Industrial Marketing Management, 46, pp. 24-35.
Reverte, C. (2012). The impact of better corporate social responsibility disclosure on the cost of equity capital. Corporate Social Responsibility and environmental management, 19(5), pp. 253-272.
Seth, A. (1990). Value creation in acquisitions: A re-examination of performance issues. Strategic management journal, 11(2), pp. 99-115.
Starova, H. & Černohorsky, J. (2010). Value creation of european bank mergers and acquisitions in the 1998–2007 period. Journal of Economics, 58(5), pp. 458-470.
Swaminathan, V.; Murshed, F. & Hulland, J. (2008). Value creation following merger and acquisition announcements: The role of strategic emphasis alignment. Journal of marketing research, 45(1), pp. 33-47.
Tamosiuniene, R. & Duksaite, E. (2009). The importance of Mergers and Acquisitions in Today’s Economy. KSI Transactions on Knowledge Society, 2(4), pp. 11-15.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Collins, C Ngwakwe
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
