Meta-Analysis on The Effects of Mergers and Acquisitions

Mergers and acquisitions draw a great deal of academic and public attention due to the large and widespread influence that they often have. The large amount of attention leads to a great deal of studies on the effect of mergers and acquisitions. However, the results of the studies are inconclusive and are often contradictory. Some studies find positive effects while others find negative or insignificant effects. This thesis aims to find the general effects of mergers and acquisitions, and to explain the differences that are found in the results. This for the three most researched effect areas: costs, profits, and stock prices. The analysis is performed using a stepwise least squares meta-analysis. From this it can be concluded that the general effect on costs is a cost increase, however significant studies show almost no cost effects. The general effect on profits is a profit decrease, but significant studies show a lower profit decrease. Finally there is a general increase in stock prices, but again significant studies show a lower increase in stock prices. The general result is strongly influenced, and can even be reversed when the studies fulfil (multiple) characteristics that have a significant influence. The cost effects are strongly influenced by analysing the years after 2000. While the profit effects are strongly influenced by analysing mergers and acquisitions in the USA. The stock price effects are strongly influenced by analysing the public services sector and focussing on targets. The meta-analysis results show that is it of great importance to consider the characteristics of studies on the effects of mergers and acquisitions, as they influence the outcome.