The Profitability of Swedish M&A Deals: Does Acquisition Yield Abnormal Returns to Shareholders?

Abstract: Adapting a modern perspective, this study investigates whether M&A activity in Sweden is value creating or value destroying for shareholders. We study the effect of Swedish M&A announcements from an acquirer perspective. Using data covering three years on Swedish firms performing national acquisitions, we find positive market reactions to firms announcing a takeover. Our results are important contributions since we conclude that M&A deals with a focus on the financial and real estate sector yield lower returns to its shareholders compared to other industries. Instead of explaining lower returns due to tax rules and non-hostile takeovers, we argue results depend more on lack of synergies and lower asymmetric information.