Another Look At Theoretical And Em-pirical Issues In Event Study Methodology

McWilliams, Thomas P.; McWilliams, Victoria B.

doi:10.19030/jabr.v16i3.2038

Cited by 28 publications

(21 citation statements)

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“…The approach was initially developed to measure the effect of an event on stock prices (Binder, 1998;Dodd & Warner, 1983) and subsequently determine whether the event was beneficial or harmful to the organization's stakeholders (McWilliams & McWilliams, 2011). It was originally based on the premise that the discounted value of an organization is representative of its future profits.…”

Section: Methodsmentioning

confidence: 99%

An event study of home and host country patent generation in Chinese MNEs undertaking strategic asset acquisitions in developed markets

Anderson

Sutherland

Severe

2015

International Business Review

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Publisher's copyright statement: NOTICE: this is the author's version of a work that was accepted for publication in International Business Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reected in this document. Changes may have been made to this work since it was submitted for publication. A denitive version was subsequently published in International Business Review, 24, 5, October 2015, 10.1016/j.ibusrev.2015.01.007. Additional information:Use policyThe full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. ABSTRACTWe use event study methodologies to analyze trends in home and host country patent applications of Chinese MNEs that acquire strategic asset-rich developed market businesses. Our results show the domestic market patents of Chinese MNEs rise significantly in the wake of such acquisitions, while those of the acquired target do not significantly change. These results hold for different ownership classes. In light of current theoretical debates, we discuss the possible motivations for such acquisitions by Chinese MNEs and the reasons for the observed patenting performance in both domestic and target businesses. We argue acquisition of codified strategic assets (such as patents) for the purpose of imitation and exploitation in the domestic Chinese market context provides one plausible explanation for our results.

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Section: Methodsmentioning

confidence: 99%

An event study of home and host country patent generation in Chinese MNEs undertaking strategic asset acquisitions in developed markets

Anderson

Sutherland

Severe

2015

International Business Review

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“…The use of event studies has since been utilized by a wide range of disciplines as well, includingeconomics, history, law, management, marketing (Henderson Jr, 1990;McWilliams & McWilliams, 2000;Corrado, 2011).…”

Section: Event Study Methodologymentioning

confidence: 99%

“…If the stock market reacts positively to an announcement and the stock price performs better relative to some benchmark, the researcher may conclude that that strategic decision was viewed as beneficial to the firm and the abnormal or excess return to the shareholders was due to the event itself. On the contrary, if the stock price drops around the announcement, the researcher may conclude that the stock market viewed the strategic decision as harmful for the firm and thus punished such decision by lowering the stock price (Peterson, 1989;McWilliams& McWilliams, 2000;Corrado, 2011).…”

Section: Event Study Methodologymentioning

confidence: 99%

Creating or destroying value through mergers and acquisitions: A marketing perspective

Rahman

2015

Industrial Marketing Management

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The world has witnessed a major wave of mergers and acquisitions (M&A) through the 1990s and up to 2007.A majority of these M&A deals are horizontal, involving the purchase of another company in the same industry. Such acquisitions imply a motivation to increase revenues by expanding market scope and/or market share, and/or by adding new products to the portfolio. They also suggest a pursuit of cost efficiencies in various aspects of operations. Whether these benefits are actually realised is an empirical question that has attractedresearch in several disciplines, including economics, finance and accounting. By now, there is a large body of research evidence to indicate that M&As have a poor record of success, with the main beneficiaries being the sellers who reap a one-off gain from the premium paid to acquire their firm.The objective of this dissertation was to examine post-merger performance from a marketing perspective, a topic that has not been explored thus far. This study followed a multi-stage approach; in the first stage an exploratory case study was conducted to identify the parameters of the research problem and to develop a set of hypotheses. Following this, a quantitative study of a sample of M&A transactions was carried out to test these hypotheses.The exploratory case study was based on Tata Motors, an Indian company which acquired Jaguar and Land Rover from Ford Motors. This case investigation based on both primary data collected through in-depth interview and a wide spectrum of secondary sources, showed that the acquisition had a significantly positive impact on Tata Motors' marketing performance, with sales volume and revenue growing significantly in the post-acquisition years. However, these sales increases came at a high cost; the company invested a huge amount in new product development and marketing communications, with the result that profit performance was negatively affected in the three years post-merger. Profit margins increased, however, in the seventh year 2014, suggesting that the reduction post-merger may have been a temporary effect.The quantitative study was based on a sample of forty-five M&A deals involving ninety US companies.This longitudinal study examined performance over six years, three before the merger, and three yearsafter the merger. Four analytical toolswere used:a paired sample t-test, an analysis of effect size, an analysis of covariance (ANCOVA), and regression analysis, to examine post-merger performance. The results of both raw data and log-transformeddata analyses showed that sales revenue increased significantlyin the post-merger years compared to the pre-merger years. Moreover, the combined companies reduced their marketing and selling costs in proportion to sales revenue. However, there was asignificant reduction in profit as measured by return on sales (ROS).Combining the findings from both the qualitative and quantitative studies, we concluded that post-merger marketing performance improved, i.e. sales revenue and cost of marketing and selling, but...

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“…This study relied on the market model event study method (McWilliams & Siegel, 1997;McWilliams & McWilliams, 2000) and uses hierarchical regression. Market model event studies measure wealth changes in individual stocks as compared to changes occurring in the overall market.…”

Section: Methodsmentioning

confidence: 99%

The Ability to Change or the Willingness to Change: Stakeholder Interpretation of Adversity

Napshin¹,

DeCarolis²

2011

Journal of Emerging Knowledge on Emerging Markets

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Another Look At Theoretical And Em-pirical Issues In Event Study Methodology

Cited by 28 publications

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An event study of home and host country patent generation in Chinese MNEs undertaking strategic asset acquisitions in developed markets

An event study of home and host country patent generation in Chinese MNEs undertaking strategic asset acquisitions in developed markets

Creating or destroying value through mergers and acquisitions: A marketing perspective

The Ability to Change or the Willingness to Change: Stakeholder Interpretation of Adversity

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