SHAREHOLDERS' WEALTH WITHIN A COMPANY

Shareholders' Wealth within a Company

Shareholders' Wealth within a Company

Introduction

The topic of corporate growth, through mergers and acquisitions is of great interest among researchers, managers and journalists (Kreitl et al., 2002, 7-20). There are diverse motives for corporate growth and development. In building, development is important because the dimensions of a task is large and often contractors need to investment the project as well as undertake it on the construction site (Hillebrandt and Cannon, 1990, 437-48). Also, dimensions presents self-assurance to the purchaser in the capability of the Marks and Spencer. There are other possible motives for development such as profit, cost, income and prestige. The means of accomplishing business development can occur through internal or external growth. Langford and Male (2001, 437-48) identified three means of achieving corporate growth and development.

Internally, where the firm buys into its own capital to set-up and operate a new venture. This choice is often the prime vehicle of growth.

Externally through acquisition or merger. This choice is often utilised where pace is of the essence.

Ablend scheme which blends elements of interior and external development through contractual agreements.

It is well documented that target firms shareholders earn significantly abnormal returns around take-over announcements (Ghosh and Lee, 2000, 107-14). There is a considerable volume of literature of research on the wealth effects of corporate take-overs (Draper and Paudyal, 1999, 5-50). However, the majority of these studies are not commerce specific and are not habitually involved in associated acquisitions as the businesses analysed emerge to be selected randomly from a range of industries. The aim of this study is to consider, from the UK building viewpoint, the financial effects on tendering and target firms throughout a construction related take-over process. This study examines the alleged benefits of corporate take-overs by accomplishing an event study investigation of 46 obtaining companies and 33 goal businesses drawn from the UK building industry. This paper examines the publications on amalgamation performance and describes the facts and figures and methodology involved. The final part accounts an happening study analysis and the outcomes, including a abstract and significances of the findings. In this paper, the periods amalgamation, acquisition and take-over are utilised inter-changeably.

Research background

Numerous studies approximate the effects of amalgamations and acquisitions on the economic presentation and supply prices of the companies involved in the process. Much of the literature to date, has come from the US with a special focus on the banking and finance sectors (Becher, 2000, 207-39; Bliss and Rosen, 2001, 344; Houston et al. 2001, 831-59). Cybo-Ottone and Murgia (2000, 3-31) explore shareholder wealth in European banking and find contrasting results to the US studies. Interest in the UK has amplified substantially over the past 20 years. There is a substantial capacity of research on the wealth effects of take-overs and mergers in the UK. Dickerson et al. (1997, 7-20), Draper and Paudyal (1999, 437-48), Kennedy and Limmack (1996, 107-14), and Sudarsanam et al. (1996, 5-50), all explore the financial effects of take-over ...