The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs
Journal of Finance and Accounting
Volume 4, Issue 4, July 2016, Pages: 157-163
Received: Mar. 23, 2016; Accepted: May 11, 2016; Published: Jun. 7, 2016
Views 3054      Downloads 118
Author
Omar Boufama, Faculty of Economic and Management Sciences, 20 August 1955 University, Skikda, Algeria
Article Tools
Follow on us
Abstract
This paper presents an econometric analysis of the profitability generated at the initiation of the corporates acquisition programs by French investors. These programs generally launched by the firms directors, need to have a high frequency of acquisition attempts, in order to cover fixed costs of the program and generate profits, which they increase the value of the firm and enrich the shareholders. Our empirical study applied on a sample of French companies of various economics branches gives a controversial result. Indeed, the sample of study made up of 46 firms of any size over a period of 11 years from 1997 to 2007, shows that only the hypothesis of the announcement effect was been verified. In the sub-sample of the studied companies, the acquisition programs of two “SMEs” namely Guerbet and Sartorius had a positive value, what proves their financial performance. These results show that the corporate acquisition programs are projects of value-creating investment for French small and medium enterprises. However, generally, for the sample of study, the French companies considered as frequent bidders on French acquisition market indicate clearly that firm’s acquisition programs during the study period were destructive of value. It means they do not maximize the value of the firm nor the stockholder’s wealth.
Keywords
Acquisition Program, Announcement Effect, Economic Impact, Abnormal Return, Profitability, Acquisition Attempts
To cite this article
Omar Boufama, The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs, Journal of Finance and Accounting. Vol. 4, No. 4, 2016, pp. 157-163. doi: 10.11648/j.jfa.20160404.11
Copyright
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
[1]
Aktas, N., De Bodt, E., Roll, R., 2013. Learning from repetitive acquisitions: Evidence from the time between deals. Journal of Financial Economics 108, 99-117.
[2]
Aktas, N., De Bodt, E., Roll, R., 2009. Learning, hubris and corporate serial acquisitions. Journal of Corporate Finance 15, 543-561.
[3]
Arvanitis, S., Stucki, T., 2014. Do mergers and acquisitions among small and medium-sized enterprises affect the performance of acquiring firms? International Small Business Journal, January, 1-34.
[4]
Asquith, P., Bruner, R., Mullins, D., 1983. The gains to bidding firms from merger. Journal of Financial Economics 11, 121-139.
[5]
Boufama, O., 2015. Corporate acquisition programs: Towards a model of evaluation of the profitability, try of adaptation to Algeria. Ph.D. Thesis, Badji Mokhtar University, Annaba, ALGERIA.
[6]
Bouzgarrou, H., Navatte, P., 2012. Short Term Wealth Creation Sustainability of French Acquirers of Unlisted Versus Listed Firms. Bankers, Markets & Investors N° 121, November-December, 47-58.
[7]
Jensen, M. C., Ruback, R. S., 1983. The market for corporate control: The scientific evidence. Journal of Financial Economics 11, 5-50.
[8]
Malatesta, P., Thompson, R., 1985. Partially anticipated events: a model of stock price reactions with an application to acquisitions. Journal of Financial Economics 14, 237-250.
[9]
Malatesta, P., 1983. The wealth effect of merger activity and the objective functions of merging firms. Journal of Financial Economics 11, 155-181.
[10]
Schipper, K., Thompson, R., 1983. Evidence on the capitalized value of merger activity for acquiring firms. Journal of Financial Economics 11, 85-119.
[11]
Song, M., Walkling, R., 2000. Abnormal returns to rivals of acquisition targets: A test of the ‘acquisition probability hypotheses’ Journal of Financial Economics 55, 143-171.
[12]
Weston, F., Copeland, T., 1992. Managerial Finance. Ninth Edition. The Dryden Press International Edition.
[13]
Web site of “Autorité des Marchés Financiers”: www.amf-france.org
ADDRESS
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
U.S.A.
Tel: (001)347-983-5186