Abstract
This thesis presents an empirical assessment of three key areas in mergers and acquisitions (M&A): the impact of value-based acquisition intensity on long-term stock price returns, the credibility of bidder pro forma Earnings per Share (EPS) projections, and the impact of value-based acquisition intensity on Environmental, Social, and Governance (ESG) performance. For the first time in the literature, this thesis proposes two new terms for assessing acquisitiveness: value-based acquisition intensity (VABAI) and volume-based acquisition intensity (VOBAI).The first essay highlights the need for future research in asset pricing to consider non-financial factors, such as behavioural factors, in assessing systematic risk, which has been overlooked by existing asset pricing literature. While the study found that value-based acquisition intensity is not statistically significant as a standalone systematic risk factor, the result is economically significant, as the portfolio results provide a general, intuitive signal of firm behaviour. The results in this essay suggest that value-based acquisition intensity is an idiosyncratic factor that impacts companies differently.
The second essay assessed the credibility of bidder pro forma EPS projections, and empirical findings suggest that these projections are mostly not credible when reviewed in absolute terms. The absolute analysis revealed that 54% of the sampled deals failed to meet the stated pro forma EPS projection within the synergy date or within three years of the deal becoming effective. Additionally, larger companies were more likely to meet their pro forma EPS projections than smaller companies. A parallel analysis, performed to determine the forecast error of these projections revealed that the average forecast error of the sample was within the generally acceptable accuracy threshold of ±10 %. This suggests that, although these forecasts were not credible in absolute terms, the actual EPSs achieved by the bidders were not far from the forecast values. The essay recommends both the absolute and relative analysis should be performed in parallel to obtain a holistic view of credibility.
The third essay examined how the intensity of value-based acquisition intensity impacts ESG performance from the perspective of the acquiring company. The findings suggest that aggressive M&A intensity erodes ESG performance. The study emphasises the importance of maintaining a balance between pursuing aggressive growth ambitions through mergers and acquisitions (M&A) and deliberately investing in initiatives that advance sustainability.
In summary, these essays contribute empirical evidence to the existing literature. The findings also offer actionable insights for academics, investors, portfolio managers, companies, regulators, and analysts.
| Date of Award | 5 Jun 2026 |
|---|---|
| Original language | English |
| Awarding Institution |
|
| Supervisor | Paraskevas Pagas (Supervisor) & Arief Daynes (Supervisor) |
Cite this
- Standard