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M&A Activity, Divestitures and Initial Public Offerings in the Fashion Industry

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Steffen Meinshausen

This thesis analyzes four individual corporate finance-related research objectives on the fashion and leather accessories industry. The first two studies investigate the share price reactions of strategic bidder M&A transactions and their key drivers. The third study analyzes the implications of a missed disposal opportunity in the luxury fashion segment. Finally, the fourth study illustrates the long-term performance and changes in systematic risk exposure of initial public offerings in the fashion industry. The thesis contains a variety of empirical findings that are novel to the existing literary base of corporate finance research. It shows the various drivers of consolidation in a highly-dynamic and heterogeneous industry segment over the course of the last two decades.

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1 INTRODUCTION

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This dissertation analyzes the implications of mergers and acquisitions, divesti- ture activities and initial public offerings in the fashion and leather accessories industry. It contains four independent empirical studies and covers a large frac- tion of corporate finance-related activity in a business segment that has been widely disregarded in previous research. The purpose of this introduction is to give a short overview on macroeconomic trends and industry-specific characte- ristics of the apparel industry. We will also briefly introduce our four research objectives and some of the key findings of our following studies. Generally, the apparel business segment has seen extensive shifts in industry dynamics over the course of the previous decades. High labor costs in esta- blished Western countries and decreasing costs of global logistics have triggered a wide-spread outsourcing of manufacturing activities into low-cost developing countries. This has rendered a great deal of workers in developed countries un- employed. The subsequent reductions in manufacturing costs and mass produc- tion have also given way to the strong proliferation of clothes in the low-price segment (Abernathy et al. (1995)). Still, European and North American apparel companies play leading roles in the up-scale and luxury fashion sector where the main emphasis is rather put on product quality, individual features and exclu- sivity than price competition (Glasmeier et al. (1993)). Aggregate demand has further shifted from traditional developed to emerg- ing markets such as China, India, the countries of the Middle East and Russia where increases in economic wealth and personal prosperity in...

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