TITLE

MARKET REACTION TO ACQUISITION ANNOUNCEMENTS AFTER THE 2008 STOCK MARKET CRASH

AUTHOR(S)
Uygur, Ozge; Meric, Gulser; Meric, Ilhan
PUB. DATE
June 2014
SOURCE
International Journal of Business & Finance Research (IJBFR);2014, Vol. 8 Issue 4, p75
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Market reaction to mergers and acquisitions is a popular research topic in finance. It has been well documented in empirical literature that target companies earn significant abnormal market returns in corporate acquisitions. However, the effects of stock market crashes, and the effects of whether the acquirer is a domestic firm or a foreign firm, on target firm abnormal returns have not been studied sufficiently. In this paper, we make a contribution to the extant literature on these subjects by studying the abnormal market returns earned by U.S. target firms acquired by domestic and foreign firms after the 2008 stock market crash. Our test results indicate that U.S. targets that were acquired by other U.S. firms earned significantly higher abnormal returns, compared with targets acquired by foreign firms, after the crash. We also find that the target companies earned greater abnormal returns in non-friendly acquisitions than in friendly acquisitions during this period.
ACCESSION #
95779987

 

Related Articles

  • No News Is News: Do Markets Underreact to Nothing? Giglio, Stefano; Shue, Kelly // Review of Financial Studies;Dec2014, Vol. 27 Issue 12, p3389 

    As illustrated in the tale of “the dog that did not bark,” the absence of news and the passage of time often contain information. We test whether markets fully incorporate this information using the empirical context of mergers. During the year after merger announcement, the passage...

  • Acquirer Valuation and Acquisition Decisions: Identifying Mispricing Using Short Interest. Ben-David, Itzhak; Drake, Michael S.; Roulstone, Darren T. // Journal of Financial & Quantitative Analysis;Apr2015, Vol. 50 Issue 1/2, p1 

    We use short interest as an investor-based measure of over- or undervaluation that distinguishes between the misvaluation and Q-theories of mergers. Using this measure, we find that misvaluation is a strong determinant of merger decision-making. Firms in the top quintile of short interest are...

  • A STUDY OF THE FINANCIAL CHARACTERISTICS OF U.S. TARGET COMPANIES ACQUIRED BY U.S. AND FOREIGN BUYERS BEFORE, DURING, AND AFTER THE 2008 FINANCIAL CRISIS. Uygur, Ozge; Meric, Gulser; Meric, llhan // International Journal of Business Strategy;2014, Vol. 14 Issue 1, p67 

    Mergers and acquisitions (M&A) is one of the most popular research topics in finance. The synergistic benefits of and market reaction to mergers have been studied extensively. Most merger studies deal with specific countries. Cross-country mergers and acquisitions have not received sufficient...

  • Where cash is king, 'tis folly to be leveraged. Hudgins, Matt // National Real Estate Investor;Nov2008, Vol. 50 Issue 11, p83 

    The article focuses on the aspects for investors to consider in underwriting acquisitions amid the economic crisis. It says that investors should be an equity partner with the struggling owners. Managing director Spencer Garfield of Hudson Realty Capital says that investors need to ascertain if...

  • Finding Easy Money On the Target's Shop Floor. Robinson, Wayne // Mergers & Acquisitions: The Dealermaker's Journal;Nov/Dec98, Vol. 33 Issue 3, p35 

    Suggests evaluating a company's value-generating potential in order to assure a quick return on investment following an acquisition transaction. Questions to ask the seller before an acquisition transaction; Importance of determining whether assembly operations are labor-paced or machine- or...

  • Accounting Rates of Return as Measures of Post-Merger Performance. Stanton, Patricia // Australian Journal of Management (University of New South Wales);Dec87, Vol. 12 Issue 2, p293 

    Abstract: Accounting rates of return are used widely in empirical studies to assess postmerger performance and to compare this performance with that of non-merged firms. This paper suggests that there are many problems involved. In particular, accounting rates of return are unreliable measures...

  • A Media Deal Bellwether?  // Mergers & Acquisitions: The Dealermaker's Journal;May2010, Vol. 45 Issue 5, p6 

    The article reports on the efforts of several corporate executives for the recovery of mergers and acquisition industry from crisis in the U.S.

  • Consider an Acquisition During Tough Economic Times. Campbell, Curtis // Orange County Business Journal;8/23/2010, Vol. 33 Issue 34, pA.32 

    The article discusses the impact of the acquisition activity of companies in Orange County, California on firms which are struggling financially because of the tough economic conditions.

  • Does The Financing Decision Help To Understand Market Reaction Around Mergers And Acquisitions? Bouzgarrou, Houssam; Louhichi, Waël // Journal of Applied Business Research;Mar/Apr2014, Vol. 30 Issue 2, p465 

    Few studies distinguish between the method of payment and the means of financing in mergers and acquisitions. This paper aims to test if the financing means has incremental information beyond that contained in the payment means. To answer this question, we consider a sample of 265 deals...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics