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Financial Analytics: Science and Experience
 

Evaluating the efficiency of mergers and acquisitions in the telecommunication sector

Vol. 8, Iss. 47, DECEMBER 2015

PDF  Article PDF Version

Received: 23 November 2015

Accepted: 7 December 2015

Available online: 25 December 2015

Subject Heading: ASSESSMENT AND APPRAISAL ACTIVITIES

JEL Classification: 

Pages: 25-38

Fedorova E.A. Financial University under Government of Russian Federation, Moscow, Russian Federation
ecolena@mail.ru

Medvedeva A.A. Financial University under Government of Russian Federation, Moscow, Russian Federation
bzzz93@mail.ru

Importance The research focuses on processes of the Russian M&A market development in telecommunications, and how specifics of deals influences their efficiency.
     Objectives The research analyzes how volume and areas of such deals influence the efficiency of mergers in telecommunications. The research also reviews methods for analyzing the efficiency of deals, describes the relevant Russian market, formulates hypotheses on the basis of empirical evidence, builds a database, gather regression factors, and investigates their effect on the efficiency of deals.
     Methods We evaluate the efficiency of deals in telecommunications for the period from January 2005 through March 2015 using the Cumulative Abnormal Return. The trade-off between some M&A return and their specifics is analyzed by evaluating the normality of distribution.
     Results The analysis shows the extent some aspects of M&A influence their efficiency.
     Conclusions and Relevance Every profit-making company pursues profit and capitalization growth. In the saturated market, M&A become the principle mechanism. However, this business restructuring method is affected with various factors, without generating permanently positive results. In M&A it is necessary to adequately analyze external and internal aspects of deals.

Keywords: analysis, efficiency, deal, diversification, deal volume effect, CAR

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