Mergers and Acquisitions of North American and European Airline Industry: An Event Study Evidence on Value Creation

Abstract: With the development of international markets and the globalization of economic activities, mergers and acquisitions (M&A) as a strategy for both internal and external growth become more and more important. A representative case is the M&A transactions in North American and European airline industry. This paper investigates the impact of mergers and acquisitions on value creation for the bidding firms. Using data on 32 mergers and acquisitions between 2000 and 2008 and employing the well-established event study methodology, the paper concludes that M&A transactions in North American and European airline industry create a statistically significant value for the shareholders of the acquiring firms. Then the factors of M&A-success are analyzed by applying cross-sectional regression. The results in this paper would supply guidelines for the shareholders, managers and investors when they consider acquisitions decisions.