Hardy M. Thomas

University of Essex · Essex Business School (EBS)

We investigate the puzzle of banks contracting the services of external advisors for deals they can self-manage and the role of financial advisors in mergers and acquisitions among European banking firms. We also study the determinants of the choice by bank acquirers and bank targets to either appoint external advisors or manage in-house, as well a...

In the research literature on UK takeovers there seems to be an apparent conundrum. First, it appears that, in general, the market anticipates overall equity cash flow gains from a takeover in the sense that the share price of the acquiree firm typically increases relative to some appropriately market-adjusted benchmark over the period of time from...

This paper investigates the impact of mispricing and growth on salient aspects of 434 UK merger and acquisition (M&A) deals over the 1990–2009 period. Mispricing is proxied by both the 26-week high price and misvaluation given by the deviation of target price from its estimated fundamental value. One or both of these variables has a significantly p...

In a comprehensive study of all shipping mergers and acquisitions since 1984 we document that the shareholders of both acquirer and target realize average abnormal gains of 1.2% and 3.3% respectively and both parties gain more from diversifying than focus-increasing deals. We find that acquirers gain more when paying with stock, in cross-border dea...

We provide evidence that ex ante misvaluation matters for merger activities in the UK 1986-2002 using a sample of 302 bidders and targets. Sector or long-run misvaluation causes merger firms to be more overvalued than nonmerger firms. Acquirers are overvalued absolutely and relative to targets which are themselves absolutely undervalued. Bidders us...

We investigate whether divestitures are associated with changes in operating performance. We evaluate the total operating performance of a pro-forma combination of seller and buyer firm in each divestiture and of the seller and buyer firms separately. We control for industry performance, pre-sale performance of the seller and buyer firms and the le...

We analyse a unique sample of 165 foreign divestitures by UK firms 1986–1995. These divestitures lead to significantly positive shareholder wealth effects of 4.8% over the 10 days before and after the announcement date. They are several times larger than the corresponding wealth effects reported for US firms and are robust to a number of factors su...

We propose and test a new misvaluation approach to mergers and acquisitions (M&As) using a sample of 302 UK bidders and targets 1986-2002. Our model assumes that managers have insider information on book values while investors only have publicly available information. We find that bidders are overvalued relative to targets. Strikingly, bidders in c...

This paper has estimated a valuation model on three annual cross-sections for 1990, 199 1 and 1992 for UK Official List firms reporting positive research and development expenditures. The valuation model is also estimated on the pooled annual data. The valuation model is based upon the idea that the excess of market value over book value for assets...

We study the short-run wealth effect of a sample of 165 foreign divestitures by UK firms over the 1986-1995 period. These foreign asset sales by UK firms give rise to significantly positive shareholder wealth effects of about 0.82% around the announcement day and about 4.8% over the 10 days before and after the announcement day. Our findings are ro...

This paper uses an event study approach to examine the performance improvements accruing to those UK firms making assets sales in a single divestiture. It is found that a divestiture announcement leads to an increase in shareholders' wealth of between 0.81% and 1.04% depending on the expected return model employed. The source of the wealth gain can...

The changes in operating performance associated with asset sales are investigated for a sample of UK firms. Asset sales are followed by an improvement of 11% per annum in the level of operating performance relative to the pre-sale performance level. Further, improved abnormal operating performance is found, which is measured after controlling for t...

We examine the links between hot markets and momentum in explaining merger waves using a sample of 881 UK acquisitions from 1985 to 2000. We find evidence of short run positive abnormal returns (or merger momentum) in both hot and cold markets. We find evidence of long run reversal. The post acquisition abnormal returns are negative over three year...

In the research literature on UK takeovers there seems to be an apparent conundrum. First, it appears that, in general, the market anticipates overall equity cash flow gains from a takeover in the sense that the share price of the acquiree firm typically increases relative to some appropriately market-adjusted benchmark over the period of time from...

This paper examines the empirical cross-sectional relationship between residual income and market value for U.K. firms. It does so because of recent claims that RI is a better measure for use by firms in internal planning and control activities than, say earnings. If such is the case then, presumably, we would expect that RI has a stronger associat...