Abstract

HINOJOSA-TREVINO, Sergio Raúl; CORTEZ-ALEJANDRO, Klender Aimer  and  RODRIGUEZ-GARCIA, Martha del Pilar. Mergers as Determinants of Low Capital Costs: The Mexico Case by Means of the Application of a Fuzzy Regression Model. Cuad. Contab. [online]. 2015, vol.16, n.41, pp.329-353. ISSN 0123-1472.  https://doi.org/10.11144/Javeriana.cc16-41.fdbc.

In this study we analyze whether mergers reduce the capital cost of public companies in Mexico. For this purpose, we start with a sample made up by companies from different sectors that form the Stock Market Index (IPC, by its name in Spanish) that made an acquisition operation approved by the Mexican authorities during 2010 and 2011. In order to estimate the capital cost we used the traditional CAPM and the D-CAPM, which considers a downtrend risk. Both estimates were made three years before and three years later after the acquisition with two measuring methods: Ordinary Least Squares and Fuzzy Regression. The results show an advantage of the fuzzy regression method over the ordinary least squares, mainly for periods with a high uncertainty. Besides, taking into account the estimations of the D-CAPM model, we can conclude that for the companies in the sample, there is a 0.62 to 0.65 chance of reduction in the capital cost after the merger.

Keywords : capital cost; mergers; fuzzy regression; downtrend risk.

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