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The study of stock price dynamics around mergers & acquisition events

  • The study attempts to analyze the short-term effects of merger and acquisition bids of German acquirers on the stock prices of two involved companies. On the announcement day, a statistically significant average abnormal return of 11.5% is found for the target firms compared to an insignificant negative abnormal return of -0.28% for bidding firms, and the synergistic gain for involved firms is 5.72% on average. The strategy of specialization or diversification shows strong evidence that it has a large impact on the short-term stock returns with specialization triggering stronger abnormal returns than diversification bids for bidding firms and substantially smaller price reaction for target firms. The outcome also suggests that higher target cash-to-market-value ratio leads to significantly lower abnormal returns for target firms during the announcement period.

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Author:Denny Agussalim
Advisor:Uwe Hack
Document Type:Bachelor Thesis
Year of Completion:2017
Granting Institution:Hochschule Furtwangen
Date of final exam:2017/01/30
Release Date:2017/02/07
Degree Program:IBM - International Business Management
Functional area:Finance & Accounting
Licence (German):License LogoUrheberrechtlich gesch├╝tzt