Page 78 - Azerbaijan State University of Economics

N.V. Abdullayeva: Value creation through mergers and acquisitions in energy sector

2000, Yuce and Ng (2005) suggested that acquirers earned significant positive

abnormal returns when target was private company and not listed one.

Methodology, model, selected estimation period and sample are factors affecting the

results of various studies. Some researchers state that type of company, industry; means

of payment, firm size, economic conditions, and regulations have significant impact on

performance of bidders and targets stock prices. In order to scrutinize this assumption

Choi & Russell (2004) conducted a research with a sample of construction companies in

United States. They found that after merger or acquisition firms have better performance

to some extent and there is no impact above mentioned factors on economic and

financial performance acquirer and target.

Moreover, when testing the realtion between the size of the firm and financial

performance after the deal completion, Loderer and Martin (1992) found no

relationship between those.

Likewise, research on firms listed on London Stock exchange conducted by Dodds

and Quek (1985) with a sample of approximately seventy transactions in mid-70‘s

exhibits a CAAR of –6.8% over the 60 months after the announcement day.

There are not many studies on energy sector regarding financial performance of

companies during mergers and acquisitions. Leggio and Lien (2000) inspect seventy

six M&A announcements of electric companies in the period from 1983 to 1996. In

their paper, they conclude that target companies obtain abnormal returns with event

window of three days. Since one of the aspects of their study was to examine how

diversification impacts the financial performance of acquirers, results exhibited that

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