Mergers

Mergers and Acquisitions in the Telecommunications Industry: Myths and Reality
Myeong-Cheol Park, Dong-Hoon Yang, Changi Nam, and Young-Wook Ha

This paper investigates how market participants react to mergers and acquisitions (M&As) involving telecommunications companies. The a posteriori evidence suggests that such activities convey bad news to the market. This is arranged with the synergism trap hypothesis and extant empirical conclusions of value-reducing diversification strategies in recent literature. The evidence also indicates that a cross-b assure, kind of than a domestic M&A deal, is the main number one wood of the negative market reaction. Further, our evidence of negative impacts on the bidders business after an M&A reinforces our main finding that market participants, on average, perceive M&A activities to be detrimental to shareholder value. This suggests that value creation or synergy through an M&A deal is not warranted plain though it can generate an increase in size of the firm.

I. INTRODUCTION
Numerous M&As have recently taken place in the telecommunications industry, primarily in the United States and Europe.



This beat of M&As is related to three historically important events that affected market structure and competition: 1) The Revision of the American Telecommunications Act in 1996, 2) A WTO Agreement in 1997, and 3) The integration of the European Union in 1998. Among these events, the WTO agreement triggered a widely distributed competition in the telecommunications industry by reducing the entering barrier to the telecommunications markets of foreign countries, in that respectby resulting in the movement of world(prenominal) M&As. Unfortunately, however, as the industry has become more privatized and liberalized, there has been a significant increase in competition and an turn up decrease in profitability. Given the vastness of the industry, experts conjecture that this unforesightful configuration will eventually lead to its globalization. This trend is already apparent with the increase...If you want to get a full essay, order it on our website: Orderessay



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