| Author: | Wei, Lucy |
| Title: | The short-run and long-run effects of financial firms acquiring technology targets : evidence from around the world |
| Advisors: | Lu, Haitian (AF) Luo, Xiapu Daniel (COMP) |
| Degree: | DFinTech |
| Year: | 2024 |
| Subject: | Consolidation and merger of corporations High technology industries -- Mergers Financial services industry -- Mergers Financial services industry -- Mergers Hong Kong Polytechnic University -- Dissertations |
| Department: | Faculty of Business |
| Pages: | v, 137 pages : color illustrations |
| Language: | English |
| Abstract: | Mergers and acquisitions (M&As) are key business strategies used by companies to grow quickly. In particular, companies within the financial industry have been conducting M&A deals to acquire firms with high-tech capabilities to ride the Financial Technology (FinTech) trend and gain new competencies and offerings. The question around how to transform a financial firm into a FinTech firm is both an interesting and imperative one. Existing evidence shows that many financial firms achieve this by acquiring a high-tech player, thus transforming from a traditional financial institution into a “FinTech” firm. This thesis studies the post-acquisition performances of financial firms that acquire high-tech firms. In this study, I focus on acquisitions of FinTech firms, although I also use the term “M&A” more generally as well, given this is how these deals are conventionally referred to. I examine the Cumulative Abnormal Returns (CAR) of financial acquirer firms over a short window following the acquisition deal announcements to understand whether market reactions are positive or negative in the short-run following deal announcements. Then, I examine the long-run performance of the financial acquirer companies by analyzing three performance measures: the acquirer firms’ Return on Assets (ROA), Return on Equity (ROE), and Tobin’s Q. Finally, I also study how the geography of the target firms impact financial acquirer firms’ post-acquisition performances. This thesis studies how ROA, ROE and Tobin’s Q differ depending on whether a financial firm acquires a target player from the same country, or different country, as itself. The empirical findings show that, on average, the market perceives deal announcements by financial firms positively, although after controlling for certain factors, the evidence becomes weak or insignificant. Acquiring high-tech target firms leads to better market performances as measured by Tobin’s Q for financial companies in both the short-term and long-term. However, this is not the case when measuring performance using the accounting measures ROA and ROE. Furthermore, the findings indicate that cross-border acquisitions of high-tech firms have a significantly positive effect on market performance compared to domestic acquisitions. Additionally, cross-border acquisitions show insignificant or positive effects on accounting performance over longer time periods. Robust analyses are offered to confirm the main claims of this thesis. Practical relevance and implications are also provided where possible. This study complements findings in existing M&A literature and offers some new insights and patterns for financial companies that acquire high-tech targets. The international evidence offered in this thesis also provides some guidance on how financial firms can be transformed into FinTech firms in the future. |
| Rights: | All rights reserved |
| Access: | restricted access |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| 7813.pdf | For All Users (off-campus access for PolyU Staff & Students only) | 1.4 MB | Adobe PDF | View/Open |
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