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Research on mergers has made considerable progress over the last 50 years and has produced a vast body of literature, especially in the developed markets of the world. Little is known about the effect of announcements of mergers on shareholder wealth in the Indian context. Also unknown is the apparent influence of the market for corporate control on such wealth effects. The purpose of this paper is to fill gaps in this knowledge.

The study uses a standard event study method and statistically analyses share price and other secondary data.

It was found that the acquired firm shareholders enjoy significant wealth gains of 11.6 per cent in a 21‐day event window period, whereas the acquiring and combined firm shareholders do not do so. Mergers that do not see transfer of corporate control bestow significant wealth gains of 21.1 per cent on announcement on the target firm shareholders, whereas those where such a transfer takes place do not witness such gains.

One of the limitations of the study is the period. This study, a part of research covering a larger gamut of issues, necessitated the restriction of the time to the seven‐year 1996‐2002 timeline. The sample size of 34 usable, finally merged pairs of firms may appear limited, though several studies of this genre have used smaller sample sizes. However, the findings obtained are of value. The study points towards further research using a longer period that might help one to understand longitudinal variations in merger announcement effects on shareholder wealth. It also encourages future studies on several other factors which influence such effects.

The redistribution of shareholder wealth on merger announcement in India seems to be following a pattern similar to that found in many other studies, though the quantum of gains to the target shareholders is larger. Managers may also have to factor‐in the impact of the transfer of corporate control from the acquired to the acquiring firm on their assessment of shareholder wealth effects before announcing mergers.

The paper simultaneously adds to knowledge about wealth effects on merger announcement and the influence of the market for corporate control on this effect, in the Indian context.

The purpose of this paper is to analyse the short-term wealth effects of mergers and acquisitions (M & As) in Malaysia. In addition, this study also examines the factors that affect the short-term shareholders’ wealth during M & A announcements in Malaysia.

The short-term wealth effect is measured by the Cumulative Average Abnormal Returns (CAARs). For the purpose of this study, the wealth effects of a sample of 180 target and 196 bidding companies announced in Malaysia during the period from 2001 to 2009 are analyzed.

Results of the study revealed that there are positive market reactions by both target and bidding shareholders towards M & A announcements. However, target shareholders earned significantly higher CAARs than bidding shareholders. There is sufficient evidence to suggest that economic condition surrounding merger announcements, type of acquisition (diversified/related), premium paid and status of bid (successful/failed) affect the short-term wealth effects of target and bidding shareholders during M & A announcements. However, the impact on the target and bidding shareholders are different. Relative size negatively affects bidding shareholders’ wealth. Target with higher ROE also earned significantly higher returns.

There is high number of announced M & A deals in Malaysia, little is known about the determinants of short-term wealth effects of M & As in emerging market Malaysia, in particular the third M & A wave.

The purpose of this study is to comparatively analyze the effect of dividend policy on shareholders’ wealth in Shariah-compliant (SC) and noncompliant (NC) nonfinancial firms in Pakistan.

All the nonfinancial firms listed on the Pakistan stock exchange have been taken as a sample for 2016–2021. The Karachi Meezan index screening criteria were applied to screen SC firms. Based on the BPLM and Hausman test results, the authors used the fixed-effect and pooled OLS model for SC and NC firms, respectively. The F-test was used to compare the effect of each dividend policy variable on shareholders’ wealth for both firm types.

The findings reveal that the dividend policy does affect the shareholders’ wealth in both firm types. Dividend per share (DPS), dividend yield (DY) and earnings per share significantly affect the shareholders’ wealth in SC firms. For NC firms, the dividend payout, DPS and DY are critical. Moreover, the F-test results show that the DPS, DY and leverage effect on the shareholders’ wealth significantly differ for both firm types.

This study fills the research gap in the Pakistani context specifically as well as globally by providing important insights into the relationship between a firm’s dividend policy and shareholders’ wealth for SC and NC firms. In addition, this study comprehensively compares the results for both firm types, which is also lacking in the existing literature. Because this study is based in Pakistan, the generalizability of the results would be limited.

The findings of this study are helpful for the management of SC and NC firms in devising their dividend policies that can maximize their shareholders’ wealth. This study also provides guidance and knowledge to investors in choosing companies for their investments that can maximize their wealth.

To the best of the authors’ knowledge, this is the first study that analyzes the relationship between dividend policy and shareholders’ wealth for SC firms in Pakistan. It is also the first study that comprehensively compares the dividend policy relationship with shareholders’ wealth for SC and NC firms. In addition, using the F-test for joint hypotheses to compare the specific effect of each dividend policy variable is a methodological contribution of the study.

The purpose of this research is to study the impact of divestitures on shareholder wealth. This study covers selloffs of publicly traded companies in Germany, Austria and Switzerland (DACH region) during the period 2002–2018. It aims to understand the overall effect of selloffs on shareholder wealth as well as the impact of important influencing factors.

This study is part of capital market studies which investigate shareholder wealth effects (abnormal returns) using event study methodology. To determine the significance of abnormal returns, a standardized cross-sectional test as suggested by Boehmer et al. (1991) was applied. The sample consists of 393 selloffs of publicly traded companies with a deal value of at least EUR 10m.

The findings confirm the overall positive impact of selloffs on shareholder wealth. The average abnormal return on the announcement day of the sample companies amounts to 1.33%. The type of buyer, the relative size of the transaction as well as the financial situation of the seller in particular seem to influence abnormal returns positively.

This study investigates shareholder wealth creation through selloffs in the DACH region, a largely neglected region in divestiture research, but now very relevant due to increasing pressure of active foreign investors. Sophisticated statistical methods were used to generate robust findings, which are in line with the results of similar studies for the US and the UK.

The purpose of this paper is to examine the influence of earnings management (EM) and tax aggressiveness (TA) on shareholder wealth and on stock price crash risk (SPCR) of German companies.

The sample comprises 820 firm-year observations of 188 non-financial companies listed on German stock exchanges from 2008 to 2014. The authors apply generalized least square panel regression to overcome autocorrelation and heteroscedasticity problems.

EM and TA are not related in terms of affecting shareholder wealth and SPCR. EM has no impact on shareholder wealth but significantly affects SPCR. TA has a significant positive effect on shareholder wealth but no impact on SPCR. Thus, EM practices applied within German companies are non-opportunistic, as they do not affect shareholder wealth and decrease SPCR. TA practices are also non-opportunistic, as they increase shareholder wealth and do not affect SPCR.

This study provides insights that can improve managers’ accounting choices (EM vs TA) and alleviate investor concerns about the effect of managers’ manipulation strategies. Considering other variables affecting TA, such as discretionary book tax differences, may add further insights into this discussion. The analysis of and comparison with other markets may shed more light on the validity and generalizability of the results.

This study recommends that investors must take into consideration the accounting variables to ensure better investment decisions and highlight the importance of CEO choices on market reaction.

The investigation of the mutual impact of EM and TA on shareholder wealth and SPCR is novel, and so too is the analysis of whether EM and TA are complementary or substitute for each other in this relationship.

This paper presents an analysis of UK merger policy based upon the allocative effects of Monopoly and Mergers Commission (MMC) decisions. For some time now evidence has been available concerning the ineffectiveness of MMC decisions in reducing product market concentration (see Simpson and Shaw 1986, 1989). So, if the reduction of market concentration is not a systematic result of decisions of the MMC, it is interesting to ask what have been the discernible effects of the MMC's activities and what revised objectives might be formulated for that body?

The purpose of this paper is to examine CEO wealth changes around seasoned equity offerings (SEOs) to explore the shareholder-manager incentive alignment in major corporate equity financing decisions.

The authors decompose CEO wealth into three major components: price effect, board compensation grant, and CEO’s own portfolio adjustment. The authors then compare SEO-event sample vs non-event samples; and evaluate the dynamic and long-run CEO wealth effect.

The authors find when market reacts negatively to SEO announcement leading to losses in CEO’s existing firm-related wealth, CEO gets additional grants to offset the losses. Although this appears to be a rent-seeking activity, the authors find that the additional grants are mainly in the form of stock options which would have no value if stock price failed to pick up in the future. In this sense, the additional grants align the interests between shareholders and managers. Consistent with this argument, the authors show that the additional grants motivate CEOs to promote the stock performance, benefiting themselves as well as shareholders in the long-run.

The study explicitly calculates the contribution of each wealth component to CEO total wealth effect. The results improve the understanding of CEO compensation policy change after major corporate event and contribute to the literature of the optimality explanation of prevailing compensation policy.

This paper aims to analyze the effects on shareholder value caused by the announcement of seasoned equity offerings (SEOs) by real estate firms from 12 European countries.

A 4-factor model event study is conducted to assess the impact of SEO announcements on firm value. Additionally, a cross-sectional regression is run to identify factors that aggravate or mitigate the documented announcement effects.

Significant wealth losses of −1 per cent are found on the announcement day of an SEO. However, firms with good corporate governance and a low probability of overinvesting experience less negative announcement effects.

The present study considers equity financing. In this context, investors seem to thoroughly assess the implications of capital increases by looking at quality indicators. For firms with good corporate governance, management incentivizing mechanisms and a lower probability of overinvesting, shareholders’ trust in the management mitigates the bad signal that the announcement of an SEO usually conveys.

The finding of corporate governance as a value enhancing factor in the context of equity offerings, even during periods of financial turmoil, is reassuring to both managers and regulators.

The authors study the shareholder wealth effects of the adoption and subsequent litigation confirming the validity of shareholder right plans that are enacted to protect a firm’s net operating loss (NOL) carry forwards (tax benefit preservation plans (TBPPs)). The purpose of this paper is to expand the understanding of nontraditional shareholder rights plans, which are becoming increasingly more common.

This paper considers abnormal returns around TBPP adoptions and Delaware Court rulings that validated their use. The authors study 118 plans adopted between 1998 and 2011. Abnormal returns are measured using both a market model and a performance-matched sample.

The authors find that abnormal returns are negative at the announcement of a new TBPP. However, the full impact of plan adoption on share prices is not evident until the Delaware Courts validated their use. The Delaware Court rulings in the case of Selectica, Inc. v. Versata Enterprises, Inc. and Trilogy, Inc. are associated with additional negative wealth effects for both prior plan adopters and the firms most likely to consider adopting a plan. These results suggest that entrenchment concerns tend to outweigh the protection of NOL carry forwards when firms adopt TBPPs.

This study was the first to consider the adoption of TBPPs. Currently, it is the only study that considers Delaware Court rulings related to these plans, which allows us to successfully disentangle the entrenchment hypothesis from the potential alternative hypothesis that the negative announcement period returns are driven by investors updating their expectations for firm performance.

A friendly merger can be structured as a one‐step transaction or a two‐step transaction. For a variety of reasons, such as the fast speed with which two‐step mergers are completed, there are concerns about whether target shareholders are disadvantaged by this structure in comparison with one‐step mergers. The purpose of this paper is to examine the effects of the two types of merger structures from the shareholder point of view.

In order to compare the shareholder wealth effects of merger structure, the authors control for deal and firm characteristics and the endogenous nature of the choice of transaction form. Specifically, the authors follow the literature to use a switching regression framework with endogenous switching to address endogeneity.

No evidence was found of detrimental effects of two‐step mergers on target shareholders. The findings suggest that at least some one‐step mergers could benefit from using the two‐step structure. The authors provide several explanations for the continued use of one‐step mergers.

Although there is some literature on freeze outs of minority shareholders, no one has examined two‐step mergers in comparison with one‐step mergers. The paper's results will be valuable to corporate managers, M&A advisors, regulators, and policy makers.