| This dissertation examines the mergers and acquisitions phenomena in international arena with respect to the wealth effects, change in riskiness of firms and determinants of wealth effects. Both the domestic and international market model are employed to measure the wealth effects. With respect to measuring wealth effects, two main hypotheses are tested. First, there are no abnormal returns (wealth effects) in international M&As. Second, no differences exist in abnormal returns obtained from different countries. The findings indicate that the U.S. target firms experience statistically significant abnormal returns surrounding the announcement date and the magnitude of returns differ depending on the country of origin of the foreign bidders. Similarly, the hypothesis of no differences in abnormal returns is rejected and statistically significant differences are found in abnormal returns of the foreign targets depending on the country of origin. The foreign bidding firms experience statistically insignificant positive abnormal returns.;The investigate the determinants ot the wealth effects, both dichomotization and multiple variable cross-sectional regression analysis are employed. The results indicate that for U.S. targets of smaller size receive higher premiums than larger firms. The wealth effects are stronger for related firms than for unrelated firms, possibly suggesting that the synergy effect is stronger than the diversification effect. Also, the exchange rate, GNP growth correlation and market competition variables are found to be significant. The significance of exchange rate implies that the stronger the foreign currency against the U.S. dollar, the higher the premium paid to target. The GNP growth correlation variable indicates the existence of country diversification benefits while the market competition variables suggests that the competitiveness of market for corporate control also affects the premium paid to target firms.;The results of ANOVA test indicate that U.S. bidder firms have lower beta in the post-estimation period than the pre-estimation period. U.S. target firms experience insignificant parameter shifts. The results based on parameters developed from the post-event period show significant positive abnormal returns for the U.S. bidding firms. Conversely, using different estimation periods does not alter the conclusion for U.S. target firms. |
