Mergers and Acquisitions Relationship
Introduction
There is the increase in the global competition because the companies are focused on the corporate
environment; however, due to the competition in the market there are the results that the firms are competing in the competition. The companies are multiplying the resource and the skills so that there could be the better advantages, thus, the Capitals are ensured by the companies to enhance the competitiveness for the mergers and acquisitions (M&As) with the efforts to remain competent. The companies are focused on the firms and managements for the crucial growth and the competitiveness because firm are considerably impacted by the frequent implications of the mergers and acquisitions (M&As) in the industry.
Moreover, the companies are investing the money and making the decision or announcement so that there could be the benefits or the substantial impact on the mergers of companies and acquisitions. The wealth of the shareholders because the significant relationship is focused on the M&A and there is the importance of relationship and the activities on the shareholder’s wealth. The proposed research paper of based on the methodical manner and the relationship of the mergers and acquisitions. In the study, there is the comprehensive literature review and the research objectives with the quantitative methodology, the impact of the organizational corporate mergers on the wealth of the shareholders is focused on the research proposal in the proper coherent manner (Gaughan, 2010).
Background of the Topic
The mergers and acquisitions (M&As) are focused on the competitiveness as the contemporary corporate environment is evaluated because there can be constant changes and then the management perform according to the environment following in the industry. The companies are focused or pay attention to the highest potential so that firms there could remain competitive and there is the abundance of the firms’ resources or capacities. The firms in this way focus on the management to take the effective decisions and there are the direct control and boundaries companies on the performance and business gains.
The companies look for the capabilities and resources so that there could be the benefits and the potentials are combined with the suitable and the effective relationships. Thus, for the benefit mergers and acquisitions (M&As) are using the common strategies in order to obtain the necessary capacities. For the efficient market power companies have to restructure the abilities, and the resources. The companies are using different form corporate synergies for the acquisitions and for mutual benefits. Synergies are combined for more benefits, resources and capacities. Through the influence of the effective corporate performance there are greater and the efficient managements practices, and for the merger the effective production practice is focused to increase the market power.
According to the Onikoyi and Awolusi (2014) the mergers or acquisitions transaction need to be focused because it can be directly related to the shareholders, there can be the situations of losses and the profit with the major implications, therefore, the major decisions need to take. In the condition mergers or acquisitions, the companies need to decide that there is the need to sell their stocks or the company should retain their investments or funds (Baker & Kiymaz, 2011).
There can be different situations in the different case of the acquisition; the firm decision can change the market returns and the opportunities. The decisions can be taken for the sales as the acquiring company can set the high price and in this way, can order to acquire shares. For the financial benefits, the company could target the benefits, there may not the maximum benefits when the investments are high in the long term. There is need to decide better options among the professionals so that better decisions could be taken for the mergers and acquisitions and for the maximum financial benefit.
However, according to Arikan and Stulz (2016), there can be different situation in mergers or acquisitions, as all the shareholders can get the benefits in the short-term view and there could be the win-win situation but if the investment is done for long term then there could be difficult situation and financial situation can not be exactly as expected. The wealth of the stakeholders is focused in the paper and there is the focus to explore the impacts of the mergers and acquisitions (DePamphilis, 2013).
Methodology
Research Philosophy
In this case, there is the focus on the research of philosophy as the philosophy of ‘positivist’ is used for the philosophical stance. The literature focused on the nature of the existing information and the environment that is conceived. The impact of M&As is focused or proposed to identify about the wealth of the shareholders in the literature and the objective reality is known is known in the research methodology.
The positivist philosophy is tested and the research problem is aimed by the researcher so that the objective of the study or existing literature could be evaluated and the impact of M&As on shareholder’s wealth through the positivist research philosophy can be known.
Research Strategy
The research strategy that is used in the case is based on the research methodology because basically the strategies are adopted to collect the data regarding the issues that are faced in the case. However, the effective approach is used toward analyzing the data through the research inquiry. Various research philosophies are used and the analysis done through the quantitative or qualitative analysis and these are the main research strategies. The quantitative data include the statistical analysis of data and there is also the positivistic research philosophy.
Though, the researchers used the numerical analyses by the quantitative methods in order to evaluate the conditions and the problem using statistical. The result is more reliable and objective because there are tools and techniques in the quantitative approach, in this, way the data or research become more explanatory in nature and the deep understating of the wealth of the shareholders based on the mergers and acquisitions is focused.
Research Design
In order to find out the association in exploring the impact of M&As. the research design is focused on the shareholder’s wealth. There is the Correlational research design so that the statistical relationship can be found in two or more variables, the uncover associations can be discovered and learn through significant research design (Mligo, 2016).
Research Variables, Model, and Hypotheses
For the research model the secondary quantitative research is a focus in order to analyze the relationship, however, the number of mergers and acquisition is focused as the independent variables and the shareholder’s wealth is focused as the dependent variable. Both are measured by the share price, the control variables are focused in the research. The firm size is focused as total assets and the firm performance as profitability. The regression model is computed for the relationship that is between the independent and the dependent variables.
Here, Shareholders’ Wealth is donated as SW stands for, Mergers and Acquisitions as MA, Firm Size as FS and the firm performance as FP.
For the quantitative analyses the null hypotheses developed are following:
Hо1: Insignificant impact of the MA can be seen when acquiring firm on SW
Hо2: Insignificant impact of the FS can be seen when acquiring firm on SW
Hо3: Insignificant impact of the FP can be seen when acquiring firm on SW
Sample and Data Collection
For the sample and the data collection, the companies are focused that were enlisted in the FTSE 100 index, these companies were considered as a sample. The primary and the secondary quantitative research were focused on the analysis. In the FTSE 100 index lists, there were the companies of London and those companies have the highest rates in the market capitalization. The sample size of the companies that was collected for the sample is proposed to be 10 companies. The acquisitions activities of the companies are considered from the years 2012- 2016.
Moreover, for the data collection methods, the research methodology is considered and there were two fundamental types of the data collection that were used the example, the primary and the secondary source. For the primary methodology direct methods are considered and for the secondary data the researchers, new or scholarly articles are considered. In the secondary data, there were the data that is already researched or investigated.
The company’s information is focused with the wide range of sources, in order to check the association which is between a wealth of the shareholders and the M&As, all authentic sources are considered as the secondary resources and the data was collected from the 50 firms FTSE listed firms. On the other hand, the annual reports of the firms were also focused in order to collect the details about the mergers and acquisitions.
Data Analysis Method
For the data analysis method, the secondary quantitative research in the statistical methods is focused on the descriptive analysis. The correlation and regression are conducted for the independent and dependent variable. From the correlation and regression, the results are obtained. Through correlation and regression, the research becomes able to investigate the hypotheses and the shareholder’s wealth that is impacted by the mergers and acquisitions from the FTSE firms (Ghofar & Islam, 2014).
Justification of the Methodology
There is the focus on the quantitative methodology based on two reasons:
- The study is deeply related to the objectives as there is need to focus on the wealth of the shareholders impacted by mergers and acquisitions on the
- The methodology of the case is based on the extant academic scholarly studies because the literature review is focused by the analyzing the authentic previous studies.
References:
- Baker, H. K., & Kiymaz, H. (2011). The Art of Capital Restructuring: Creating Shareholder Value through Mergers and Acquisition. John Wiley & Sons.
- DePamphilis, D. (2013). Mergers, Acquisitions, and Other Restructuring Activities. Academic Press.
- Gaughan, P. A. (2010). Mergers, Acquisitions, and Corporate Restructurings. John Wiley & Sons.
- Ghofar, A., & Islam, S. M. (2014). Corporate Governance and Contingency Theory: A Structural Equation Modeling Approach and Accounting Risk Implications. Springer.
- Mligo, E. S. (2016). Introduction to Research Methods and Report Writing: A Practical Guide for Students and Researchers in Social Sciences and the Humanities. Wipf and Stock Publishers.