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Abstract
This paper focuses on the long run share price performance of firms involved in mergers and acquisitions in the UK, France and Germany in the period 1992-2003. Using an event study approach, it shows that there is reasonably strong evidence that UK bidders acquiring domestic public targets, and all firms, underperform in the long run, in a non-overlapping sample. There is no evidence of statistically significant long run abnormal returns amongst French bidders. Results for Germany are mixed, but it is shown that German bidders underperform in domestic public, and in all, acquisitions using a control firm approach.

The paper also uses a calendar time methodology to examine the long run profitability of mergers. We find that abnormal returns are higher in overlapping compared to non-overlapping samples in the UK, but the reverse is true for Germany. We also show that there is evidence that smaller firms outperform larger firms in domestic acquisitions in the UK, but the reverse is true for cross-border acquisitions by German firms.

Keywords: Mergers, Event Study, Long Run

1. Introduction
This study focuses on the long run share price performance of firms involved in mergers and acquisitions (M&as) in the UK, France and Germany in the period 1992-2003. More specifically, it adopts an event study approach to examine the three and five year performance of firms involved in acquisitions in these countries using a control firm and a control portfolio approach, and using a calendar time approach as recommended by Fame (1998). Evidence that firms underperform the market would be consistent with the agency or hubris explanations of merger profitability that managers pursue their own goals or tend to over-estimate their own ability to extract profits from the acquired firms (Roll, 1986). On the other hand, evidence that firms outperform the market would be consistent with the synergy explanation of M&As.
Evidence from short run studies (Jensen and Runback, 1983; Jarrell, Brinkley and Netter, 1988; Test and Sousanis, 2001) suggests that acquiring firms tend, on average, to experience zero or very small positive or negative changes in share prices around the time of a merger announcement.1 In the long run, however, there is evidence from the UK and US, that firms may experience negative returns. In some cases (e.g. Mitchell and Stafford, 2000; Hinson and Elliott, 1998) these turn out not to be statistically significant but in others (e.g. Ploughman and Vichy, 1997; Gregory and McCorriston, 2005) they are. This study seeks to consider this further using relatively recent data and data in a European context, where, with the exception of the UK, studies appear to be scarce.2 We show that results for France tend to differ from those in the UK (and US), but that there are some similarities (and some dissimilarities) between results in Germany and those in UK. This work therefore seeks to widen existing work in this area.
Recent studies have highlighted a number of important statistical issues in this area of study (e.g. Barber and Lyon, 1997; Lyon, Barber and Tsai, 1999; Kothari and Warner, 1997). These include: 1) new listing biases; 2) rebalancing biases; 3) scenes biases; and 4) cross-sectional dependence. In this paper, we follow Lyon, Barber and Tsai (1999) in using a methodology designed to avoid or re本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。