Section 1: The Proposal Template
Title
Effect of mergers and acquisitions announcement on the security prices of bidding firms in UK
Abstract
The research will provide several comprehensive overviews of the United Kingdom’s merger and acquisition reality along with some of the bidding firms looking into the security prices. The recognition of ‘European takeover market’ needs to be included, some features of domestic and cross-border corporate takeovers. There was the providing of detailed as well as comparable information on the size and dynamics of merger and acquisition activity in the UK. There can be announcement effects of possible nine percent for some firms compared to significant announcement effect which may comprise of just five percent for the bidders. When UK target is involved, the abnormal returns are higher than those of bids involving some other target. There is strong evidence that security prices has a large impact on the share prices of the bidder and the UK firm.
Introduction
Research questions are important factors in understanding overall process of the dissertation study mostly, with regards to comprehensive assessment of reviewed academic studies manifesting literature effectiveness that can be supported by research articles/journals pointing to merger and acquisition of UK firms announcing security price of bidders and some initial research process. The central question can be: What are some of the effects of merger and acquisition announcements of the security price by bidders of UK firm? For the study, the following are sub-questions of the study:
- What are some merger and acquisition issues faced by the potential bidders if security price is beyond what is expected?
- Does security prices of the bidders have positive and negative effects of merger and acquisition for UK firms? Discuss positive and negative effects?
- How does merger and acquisition functions in UK firms? Is there security price awareness? If so, how is it manifested in UK?
- How merger and acquisition announcements impose security price for UK firms with response from the bidders?
The research questions above are interesting to achieve in the study as there ensures security price analysis of bidders in lieu to merger and acquisition of UK firms as there serves ample announcements by some UK merger and acquisition firms such for example, Morrison and Safeway. The questions will offer merger and acquisition characteristics, analysis of the motives for security prices of potential bidders, such as the idea to merge, in order to arrive at a precise organization of the research study that the questions will have to be in parallel with the preliminary review of literature and other needed information showing effect of merger acquisition announcements, security price will need to be calculated for bidders and targets for certain mergers and acquisitions.
Relation to previous research
There are relations of proposed research from research as there astounds to the appraisal posted from within literature domains. Literature search and review implies critical evaluation and analysis of relevant knowledge with regards to merger and acquisition through applying critical evaluation and analysis of methodology understanding security price of bidders of UK firms, duly required to gather substantial data and information, delivering of proper research assimilation. Hart (2005 p. 764), indicated that, “there is better presentation of the literature review as it is not just a brief encounter of summary and or synopsis supporting several works of academic authors but it is of detailed encounter of awareness, understanding and total composition of studies grouped together for proper assimilation of knowledge based learning as well as theoretical and conceptual outcomes”. Furthermore, one good literature search demonstrates the ability to search, identify and select materials relevant to the topic and which need to be reviewed at a level appropriate to the project. This means all relevant indexes, bibliographies way. The keys to a successful search are: planning the search, acquiring retrievable, maintaining accurate records, selecting potentially useful items and items and reading them to extract relevant information, including argument, data, theories, concepts and definitions (Hart 2001).
Research Questions
What are some of the effects of merger and acquisition announcements of the security price by bidders of UK firm?
- What are some merger and acquisition issues faced by the potential bidders if security price is beyond what is expected?
- Does security prices of the bidders have positive and negative effects of merger and acquisition for UK firms? Discuss positive and negative effects?
- How does merger and acquisition functions in UK firms? Is there security price awareness? If so, how is it manifested in UK?
- How merger and acquisition announcements impose security price for UK firms with response from the bidders?
Literature Review
Generally, Kreiti et al. (2002), assumed presence of “business growth, through mergers and acquisitions, as one great interest among several researchers. The research in this paper is primarily motivated by the significant increase in related mergers and acquisitions that has occurred in the UK firms since the recent years, UK firms will find that some technological and financial resources are limited, and an increasing number will consider a merger or a business collaboration to deal with research contribution. Thus, Hopkins and Chaganti (1999), have examined some motives for the use of mergers in order to maximize shareholder value as, Sudarsanam (1995), have stated that firm decisions into mergers and acquisitions are created upon maximizing wealth of some shareholders. Indeed, some literature to date on mergers and acquisitions comes from the scrutiny of the financial sectors in UK, Betts and Ofori (1992); Junnonen (1998), have noted the role of mergers and acquisitions in the strategy formation, Male and Mitrovic (1999), have recognized acquisitions and mergers as the common route for market penetration and growth in size in UK industry. However, the majority of research study is not industry specific and not always involved in related acquisitions as chosen randomly from range of UK bidders. Numerous studies estimate the effects of mergers and acquisitions on the financial performance and security price of UK firms involved in the process. There is literature on the financial effects of mergers and acquisition has drawn on certain sources of statistical evidence, stock market returns and accounting rates of returns (Chatterjee and Meeks, 1996), then, Chang (1998), have reported that bidders do experience positive price return for that acquiring privately held merger acquisition target. Furthermore, security price are based on event study methodologies that have focused on announcement period returns with an identification of the wealth gains or losses to the various groups of shareholders. The research shows that mergers and takeovers resulted in benefits to the acquired firms’ shareholders and to the acquiring companies’ managers but that losses were suffered by the acquiring companies’ shareholders. The result of his study shows that takeovers being motivated more by managements’ motive rather than the maximization of shareholders wealth. Sullivan, Jensen and Hudson (1994), have find that bidding firm shareholders experience insignificant returns, and these returns are not affected by the medium of exchange.
Proposed methods
The need to utilize qualitative and quantitative methods put into combination of methods process from using one of standard financial measure, the accounting and market-based measure. The method of measurement considers the determinants of company performance using accounting data, it is believed that companies can use creative accounting techniques which may imply that their published accounts may not be a true and fair reflection of the company’s financial position. Accounting measures are subject to potential bias and tend to reflect the short-term performance of the firm over time intervals (Kennedy and Limmack, 1996). The security prices will reflect available information on the basis of efficient merger and acquisition announcement by bidders. However, a number of the acquisitions involved in the study are related to construction companies who are pursuing an acquisition program, hence this creates problems in accounting for resultant acquisitions. There is innovative methodology for evaluating the success/failure of merger and acquisitions as there consists of evaluating security prices. Therefore, security price would seem to provide reliable indication of the financial performance of firms in the periods surrounding the merger acquisition activity. The methods are chosen as merger and acquisition process in the UK suggests that bidders may start building up their stake well before the announcement of bids and hence a wider event window is more appropriate (Draper and Paudyal, 1999). There is concern for using a longer event window in calculating bidder firm returns as there is less public rumination for a bidder getting ready to make a bid. The use of longer event window to study the financial performance of the resulting entity may be questionable due to the acquisition programs large UK firms embark on and the continuing consolidation of UK based industry. Specific methods can be in the table below.
Survey
Survey is used to describe in technique of data collection in which questionnaires or personal interviews are used to gather data about sample population, can be used within many designs according to Burns and Grove (2001)
Descriptive Analysis
This type of description can be relating to literature studies of such qualitative studies in narrative presentation of ideas (Creswell, 1994)
Literature Search
Reflections
It is about how to put the general process and explained in the methodology section into process. It explain the method to make the choice, framework of critical appraisal. The literature search should come from useful and appropriate databases mostly information coming from ProQuest database, EBSCO and other search engines, Hart (2001) noted that literature search are an essential part of every research project. There are two areas to be searched including the literature relevant to the topic and the literature on research methodology and data collection techniques. There good literature search demonstrates the ability to search, identify and select materials relevant to the topic. For potential practical as well as empirical obstacle may refer to limitations of research resources as there imposes issues on some research paradigm and approach which lacks certain ethical as well as values formation of the topic focused. Some problems can represent certain ambiguity of the methods used in the process from wherein appropriate literature information can be irrelevant. For ethics, the research should consider certain ethical issues. For example, several research are often financed by people who have, either directly or indirectly, power over both those being studied and those conducting the investigation. The personal integrity, sensitivity, and possible prejudices and/or biases of the investigators need to be taken into consideration as well. Personal biases can creep into how the research is conducted, alternative research methods used, and the preparation of interviews and surveys. The researcher might have unknown gaps and biases in the study. To avoid this, researchers should report preliminary findings so that the likelihood of bias will be reduced. There needs ethical confidentiality of direct data information as one core base of research approach. Ideally, the researcher’s position in the political field does help in increasing of research spontaneity awareness towards merger and acquisitions, security prices for bidders of UK firms as there assumes research integrity and effectiveness before proper empirical research will take place and agreeing that careful selection of the literature points plays a vital role for ideal evidence and findings, related studies and reviews needs to be utilized in research formation, understanding viewpoints and analyze various theory and concept perspectives respectively. The research will recognize empirical literature concerning the influence of various factors on merger and acquisition using some research framework, as those from UK bidding firms. The presence of multiple bidders and the type of acquisition influence the bidders’ security price as while regulatory changes and tender offers influence returns into comprehensive reviews and study implications from viewpoint of proponents in research.
Conclusion
The research will help understand fully processes of acquisitions and mergers, the effects assuming security price for bidders from research organization heights. Indeed, mergers and acquisitions is understandably one of the topical strategies of corporate management in construction as firms pursue growth. There is a limited body of knowledge about the functioning of research paradigm, the announcement of an acquisition program is an area of controversy surrounding the measurement of the bidding firms returns. If such program is announced then the expected benefits of bidder’s acquisition program would be incorporated into the share price when it is announced. The gain to bidding firms would then be measured by the initial value change at the announcement of the acquisition program and the incremental effect of each acquisition. For future stance, management in UK firms can attempt to lengthen the time of the merger process to possibly seek out new bidders, who offer better opportunities for themselves and to shareholders and a detailed knowledge of control market should provide insights in the role of joint ventures, why joint ventures are used in certain aspect.
Timetable
Year: 2009
Task # 1: Prepare survey questionnaire
Task # 2: Set-up interview appointments with respondents and confirm
Task # 3: Contact contractor management teams for information
Task # 4: Conduct survey
Task # 5: Conduct interview with respondents
Task # 6: Data Analysis
Task # 7: Follow-up in case data gathering is insufficient
Task # 8: Write-up
task to be completed
APRIL/MAY
JUNE
JULY/AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
Meet with supervisor and finalize proposal
Academic literature review
Professional literature review
Interview/survey questionnaire design
Other fieldwork and data collection
Data analysis and drafting chapters
Complete first draft
Prepare final draft
References
Betts, M., Ofori, G. (1992), “Review of strategic management in construction”, Construction Management and Economics, Vol. 10 pp.511-32.
Burns, N. & Grove, S K., (2001). The Practice of Nursing Research: Conduct, Critique, & Utilization 4th edition, USA: W.B. Saunders Company.
Chang, S. (1998), “Take-overs of privately held targets, methods of payments, and bidder returns”, The Journal of Finance, Vol. LIII No.2, .
Chatterjee, R., Meeks, G. (1996), “The financial effects of take-over: accounting rates of return and accounting regulation”, The Journal of Business Finance and Accounting, Vol. 23 No.5/6
Creswell, J. W., (1994). Research design: Qualitative and quantitative approaches. Thousand Oaks: Sage
Draper, P., Paudyal, K. (1999), “Corporate takeovers: mode of payment, returns and trading activity”, Journal of Business Finance and Accounting, Vol. 26 No.5/6
Hart, C. (2001). Doing a Literature Review, London: Sage Publications Ltd.
Hopkins, H.D., Chaganti, R. (1999), “Cross-border mergers and acquisitions: global and regional perspectives”, Journal of International Management, Vol. 5 No.3, pp.207-39.
Junnonen, J.M. (1998), “Strategy information in construction firms”, Engineering, Construction and Architectural Management, Vol. 5 No.2, pp.107-14.
Kennedy, V.A., Limmack, R.J. (1996), “Take-over activity, CEO turnover, and the market for corporate control”, Journal of Business Finance and Accounting, Vol. 23 No.2, .
Kreitl, G., Urschitz, G., Oberndorfer, W. (2002), “Corporate growth of engineering consulting firms: a European review”, Construction Management and Economics, Vol. 20 pp.437-48.
Male, S., Mitrovic, D. (1999), “Trends in world markets and the LSE industry”, Engineering, Construction and Architectural Management, Vol. 6 No.1, pp.7-20.
Sudarsanam, P.S. (1995), The Essence of Mergers and Acquisitions, Prentice-Hall, London, .
Sudarsanam, S., Holl, P., Salami, A. (1996), “Shareholder wealth gains in mergers: effect of synergy and ownership structure”, Journal of Business Finance and Accounting, Vol. 23 No.5/6, .
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