University of Twente Student Theses


The initial stock market reaction to announced M&As : the case of European and UK acquirers

Stal, W.G. ter (2021) The initial stock market reaction to announced M&As : the case of European and UK acquirers.

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Abstract:This study examines the initial stock market reactions to M&A announcements by European and UK acquiring firms from 2010 till 2019. In the same manner, indicating multiple theoretical explanations, this paper provides a better understanding towards the short-term performance of M&As, captured through the stock market reaction. The sample consists of 187 M&A announcements between 2010 till 2019 by European and UK acquiring firms, capturing both domestic and cross-border M&As. Multiple analyses have been performed through statistically testing for the announcement events as well as regression analysis. The regression explicitly evaluates the role of payment method as well as distance, both geographically and in terms of governance quality between the involved countries. Overall, this study finds an average return between .582% and 1.257% for the acquiring firms, based on multiple announcement windows and the market model and market adjusted model. However, the results of the additional analysis do not present an overall influence for payment method and the earlier mentioned multidimensional distance indicators. Only a moderating effect through governance quality distance and M&A deals with multiple sources of payment is presented. More specifically, the initially observed positive stock market reaction becomes negative for mixed-financed M&As when the distance in country governance quality increases. The findings of this study are against the expectations gathered through prior research, thereby questioning the relevancy of stock market reaction investigation in the M&A research-field.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
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