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.
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