Dressed to merge — small fits fine: M&A success in the fashion and accessories industry

In this paper we examine the value implications of 192 M&A transactions in the fashion and leather accessories industry during the period from 1994 to 2009. Contrary to general cross-country evidence we find highly significant, positive abnormal returns to acquiring shareholders. Cross-sectional analysis further reveals that the key value drivers are diversifying fashion M&A transactions for smaller, profitable companies that reduce idiosyncratic risk whereas deals executed by large companies that act as frequent acquirers do not, on average, significantly enhance shareholder wealth.