How does a Merger or Acquisition announcement could influence the acquirer’s stock price?
The focus of this paper was to examine and compare what is the influence of merger or acquisition announcement on the acquirer’s stock price in a period that includes the financial crisis of 2007-2010 and in a non-crisis period. To answer the research question and test the hypotheses, an event study approach was used. The data used to answer the research question consist of 180 U.S. based companies, which have been listed on the New York Stock Exchange. The dataset is split into companies that have been involved in M&A during the crisis and in the non-crisis time and companies that did not have merger or acquisition for the same timeframes. It has been found that in a period of financial crisis, abnormal returns do not equal to zero, three days after the M&A announcement. It has been also found that during the financial crisis, the CARs for both timeframes – throughout the financial crisis and in the non-crisis period were negative, being significantly more negative in times of financial distress.
Faculteit der Managementwetenschappen