Stock Market Reaction to Acquisition Announcements Using an Event Study Approach
This paper uses an event study methodology to empirically examine stock market reaction to acquisition announcements. The results indicate that target firms experience significant positive abnormal returns surrounding an acquisition announcement. In case of hostile transactions, the abnormal returns are maximized one after event day as opposed to event day for target firms. Acquiring firms experience negative abnormal returns on announcement day for stock financed acquisitions. We observed abnormal returns on event day (Day 0) and the following day (Day 1). Based on this observation a linear regression model is developed to use publicly available information in predicting abnormal returns.
Franklin and Marshall College Archives, Undergraduate Honors Thesis 2006
- F&M Theses Collection