How will the takeover premium differ from the option premium in M&As before and after the introduction of IFRS?

Abstract

This master thesis studies the effects of the implementation of the International Financial Reporting Standards on the valuation of mergers and acquisitions. The takeover premium paid and the premium suggested by option-based theory in European M&As is compared before and after 2005. Overall, it is found that the valuation process does not seem to have been made more efficient, as were one of the purposes with introducing new accounting standards. According to option pricing, the deals examined have not been overpaid. The massive failure rate of M&As is, according to the findings in this report, not caused by a miss-valuation by the acquiring firm. The differences between the premiums paid and the premium suggested by option theory are widely dispersed.