Home  Journals  Economic Analysis: Theory and Practice  1(448) - 2016 January

Environmental effect on mergers and acquisitions efficiency in the telecommunications industry

Vol. 15, Iss. 1, JANUARY 2016

Article PDF Version

Received: 4 August 2015

Received in revised form: 20 October 2015

Accepted: 25 November 2015

Available online: 24 January 2016

Subject Heading: BUSINESS PERFORMANCE

JEL Classification: G21, G34

Pages: 69-81

Importance The article addresses development processes of the Russian M&A market in the telecommunications sector, and the effect of macroeconomic factors on efficiency of M&A transactions.
Objectives The aim is to analyze the impact of macroeconomic factors on mergers and acquisitions efficiency in the telecommunications industry.
Methods The study draws on the analysis of transactions in the Russian telecommunications industry over the period from January 2005 to March 2015. The analysis identified factors of the telecommunications sector and the entire economy, which influence the transactions. We calculated efficiency of transactions using the index of cumulative abnormal return. The analysis is based on econometric models of linear regression, probit regression; the volatility is calculated by using the GARCH model.
Results The analysis leads to the conclusion about the influence of macroeconomic factors on transactions’ efficiency. There is a weak correlation between the yield of the transaction and the condition of financial markets and entire economy, while the level of industry development has a direct impact on the deal.
Conclusions and Relevance The telecommunications sector has become one of main sectors of M&A development. Over the recent year, Russia has been experiencing economic turmoils, and enters a crisis phase. Companies are looking for the most efficient ways of development, therefore, they need to competently analyze deals in the M&A market.

Keywords: telecommunications, CAR, GARCH, linear regression, probit regression

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