POST FINANCIAL CRISIS M&A PERFORMANCE IN THE US: A DEEPER DIVE INTO THE PHARMACEUTICAL AND OIL & GAS INDUSTRY

Peer reviewed: 
No, item is not peer reviewed.
Scholarly level: 
Graduate student (Masters)
Date created: 
2019-12
Keywords: 
M&A
Event Study
Calendar-time Portfolio
Fama-French three Factor Model
Oil & Gas
Pharmaceutical
Abstract: 

The goal of this paper was to assess the performance of the M&A activities in the pharmaceutical and oil & gas sector in the US public market after the financial crisis of 2008. As historically long-term post-M&A return has been negative, we delved into ascertaining this result in these two sectors.

For analysing the performance, we have taken a sample of public companies domiciled in the US who has executed M&A activities within 2010-2017 with a deal size greater than 10 million USD. The excess return has been calculated for these stocks using monthly calendar time portfolio and Fama-French Four Factor model (using both equal- weighted and value-weighted method for the constructed portfolio) and our results re- affirms in almost every case that there is no significant positive performance for M&A activities in both pharmaceutical and oil & gas sector.

This study illustrates that historical underperformance of M&A activities persists in oil & gas and pharmaceutical sector; these sectors have been able to generate a positive return through M&A activities.

Description: 

MSc in Finance Project-Simon Fraser University

Language: 
English
Document type: 
Graduating extended essay / Research project
Rights: 
Copyright remains with the author.
File(s): 
Senior supervisor: 
Dr. Victor Song
Department: 
Beedie School of Business-Segal Graduate School
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