Value Creation in M&A: Short- and Long-Term Evidence from Swedish Acquirers

Abstract

This study examines whether mergers and acquisitions (M&A) conducted by Swedish listed firms create shareholder value in the short and long term. Using a sample of 737 transactions between 2010 and 2024, short-term performance is analyzed using event study methodology, while long-term performance is assessed using a calendar-time portfolio approach based on the Carhart four factor model. The results show that acquiring firms earn positive and statisti cally significant abnormal returns of approximately 2.9% around the announce ment date, indicating that acquisitions are perceived as value-enhancing. No significant abnormal returns are observed over longer horizons, suggesting that the expected value of acquisitions is incorporated into prices at announcement. Cross-sectional analysis identifies relative deal size and deal sequence as the only consistent determinants of announcement returns. Payment method does not robustly explain announcement returns, with no statistically significant dif ference between cash- and stock-financed deals, contrary to the predictions of traditional signaling theory