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Value Creation within the Construction Industry

A Study of Strategic Takeovers

Series:

Joachim Vogt

Mergers & Acquisitions (M&A) are important strategic business options for corporations. Yet, the understanding of industry-specific drivers of M&A transactions is more than limited. Characterized by highly fragmented markets, cross-company production structures and increasing international business scope, the construction industry represents an attractive field of research to address questions on M&A motives. Based on comprehensively selected datasets and state-of-the-art empirical methods, the study illustrates the motives, the strategy and the effects of M&A transaction within the construction industry. Overall the analyzed M&A transactions tend to lead to an increase of corporate wealth. Important factors for a positive development comprise the peculiarities of the construction industry, the general market conditions and the nature of many takeovers. Still, the M&A transactions may also cause significant value destruction and may even lead to a failure of a company if an inappropriate strategy is applied.

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List of Symbols XIX

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XIX List of Symbols i Market model based Alpha (y-axis intercept) of firm i w Market model based Alpha (y-axis intercept) for Walter Bau tiAR , Abnormal return for firm i over time interval t twAR , Abnormal return of Walter Bau over time interval t i Market model based Beta for firm i w Market model based Beta for Walter Bau TtiBHAR ,, Buy-and-hold abnormal return of firm i from point in time t until T TtjBHAR ,, Buy-and-hold abnormal return of the reference portfolio j from point in time t until T TtwBHAR ,, Buy-and-hold abnormal return of Walter Bau from point in time t until T TtcCAR ,, Cumulated abnormal return for the combined entity c from point in time t until T TtiCAR ,, Cumulated abnormal return for firm i from point in time t until T TtwCAR ,, Cumulated abnormal return for Walter Bau from point in time t until T TtiCAAR ,, Cumulated average abnormal return for firm i from point in time t until T i =1,…, N Index of observations of sample firms j =1,…, N Index of observations of reference portfolios iMV Market Value of the target i one day before the event window wMV Market Value of Walter Bau one day before the event window bn Sample extraction of the original Sample Size N tiR , Stock Return of firm i over time interval t XX tiR , Market Model based expected Stock Return of firm i over time ^ interval t tmR , Return of Market Index m over time interval t...

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