Do telecom carrier takeovers create value? Longitudinal analysis of US telecom carrier takeovers from 1996 to 2005
- Authors
- Ryu, Min Ho; Yang, Shuying; Kim, Seongcheol
- Issue Date
- 6월-2018
- Publisher
- ELSEVIER SCI LTD
- Keywords
- Mergers and acquisitions; U.S telecom carriers; Shareholders' wealth; Longitudinal financial performance
- Citation
- TELECOMMUNICATIONS POLICY, v.42, no.5, pp.395 - 408
- Indexed
- SCIE
SSCI
SCOPUS
- Journal Title
- TELECOMMUNICATIONS POLICY
- Volume
- 42
- Number
- 5
- Start Page
- 395
- End Page
- 408
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/75061
- DOI
- 10.1016/j.telpol.2018.02.005
- ISSN
- 0308-5961
- Abstract
- Takeovers by telecommunications carriers have surged during between 1996 and 2005, stimulated by the Telecommunications Act of 1996. In this study, we hypothesize and test the short-term and long-term performance of telecommunications carrier mergers and acquisitions (M&As) between 1996 and 2005 according to three main categories (strategic types, bidder characteristics, and payment methods). For short-term performance, this study investigates abnormal market returns of bidding firms after M&A announcements and our study shows that telecommunications carrier M&A announcements do result in a significant increase in shareholder wealth in the short run. However, from a long-term perspective, which has been investigated in terms of the survival rate and the operating performance after M&As, the telcos experience a statistically significant decrease of up to 10%. The results also show that though strategic type, bidder characteristics, and payment method play an important role in the value creation of M&As in the short term, only the bidder size matters in the success of M&As over a long period of time.
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