Creative Commons

The international shipping industry has been undergoing major structural changes caused by a number of factors. Shipping companies have responded to the continuously growing demand for maritime transport and the intense competition by engaging in mergers and acquisitions or by forming other cooperative agreements. This paper examines the activity of M&As in European shipping companies the last fifteen years and the incentives that lead firms to these transactions. The purpose of the study is to investigate value implications of mergers and acquisitions in both targets’ and acquirers’ shareholders at the announcement date and how this is portrayed on their stock values. The methodology used is the event study analysis which is carried out with two models and the multivariate analysis. The two models are the market adjusted model and the market model. According to each application, the empirical findings indicate the positive effect that M&A announcements cause in companies’ stock returns. However, the profits that accrue from such a transaction are higher from the perspective of the targets’ shareholder value. The impact of mergers and acquisitions plays a significant role for shipping companies in order to create higher financial value.