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As the restrictions on cross (industry) ownership and service provision were removed by deregulation and technological progress, the technology, media and telecommunications (TMT) industry embarked on the most fundamental change in its history and a massive wave of mergers and acquisitions followed. This paper analyses the valuation effects of these TMT transactions using event study methodology. Analysing 114 acquirers and up to 221 of their rival companies over a time span from 1980 to 2006, the authors found that acquirers significantly destroy value for their shareholders. This value destruction might be justified through necessary strategic positioning, however, since rival companies are also documented to suffer negative abnormal returns around announcement of such transactions. It was also found that negative abnormal returns are especially pronounced for direct competitors. Against expectations, this effect was found to be stronger for transactions after the Telecommunications Act 1996. [ABSTRACT FROM AUTHOR]

We study the wealth effects of 177 domestic and cross-border acquisitions announced by Spanish corporations between 1990 and 2004. Our findings show that domestic transactions significantly outperform international transactions. However, controlling for several firm and transaction characteristics, we do not find any cross-border effect for acquisitions of Spanish firms. Short-term valuation is driven by three factors in particular. Target size and bidder's profitability negatively affect announcement returns, whereas transactions in related industries have a positive effect. Our results may indicate that in contrast to prior empirical findings, international diversification incurs higher costs than synergies and is, among others, driven by managerial and ownership factors. [ABSTRACT FROM AUTHOR]