Evaluating the instantaneous and medium-run impact of mergers and acquisitions on firm values

This paper contributes to the literature investigating the impact of mergers and acquisitions (M&A) activity on an acquirer's firm value. To do so, we exploit a large sample of 65,521 M&A deals globally from the Communications, Technology, Energy and Utilities sectors in the years of 2000-2010. We focus on an enterprise value multiple, the ratio of EV/EBITDA, as a measure of firm value. Using the difference-in-differences (DID) strategy with and without propensity score matching, we find significant evidence of negative medium-run M&A effects and positive instantaneous M&A impact on firm value potentially because EV moves faster relative to a slow moving EBITDA.