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M&As Trends in Emerging Capital Markets Read chapter Read first chapter

2020 | OriginalPaper | Chapter

What Drives the Control Premium? Evidence from BRIC Countries

Authors : Irina Ivashkovskaya, Elena Chvyrova

Published in: Strategic Deals in Emerging Capital Markets

Publisher: Springer International Publishing

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Abstract

The literature on M&As provides ample evidence for the variability of premiums paid in M&A deals over time and in different types of deals. Most work has been done on the data from developed markets. Using a sample of M&A deals in the largest emerging markets (BRIC) for 2000–2015, we examine three types of factors (acquirer characteristics, target characteristics, deal characteristics). To measure the premium, the event study method is used; therefore the data on cumulative average abnormal returns (CAAR) is adjusted to the market movements in each respective country. We focus on three levels of acquired stakes (>25%, >50%, and 100%). The study contributes to a deeper understanding of the differences in the size of premiums among the countries and the interaction of the main determinants which influence the magnitude of the premium. The regression results document positive drivers of the size of the premium including the percentage of the stake and industry relatedness. Besides these stylized determinants, the premium increases if the deal is made in a crisis year and by a domestic bidder. The negative determinants include the target size, its financial leverage, and the pre-bid stake of the acquirer (toehold).

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previous chapter Post-acquisition Value Effects of M&A Deals: A Comparative Analysis in Developed and Emerging Capital Markets
next chapter Success Factors in M&As of Knowledge-Intensive Firms in Brazil: Evidence from Consulting Engineering Companies
Footnotes
1
Crisis time considered: 01.07.2008–30.06.2009
 
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Metadata
Title
What Drives the Control Premium? Evidence from BRIC Countries
Authors
Irina Ivashkovskaya
Elena Chvyrova
Copyright Year
2020
Book
Strategic Deals in Emerging Capital Markets

Print ISBN: 978-3-030-23849-0

Electronic ISBN: 978-3-030-23850-6

Copyright Year: 2020

DOI
https://doi.org/10.1007/978-3-030-23850-6_6