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The effect of acquisition annoucements on stock returns of acquiring firms: a short and long term study for developed and emerging countries focusing on domestic and cross border acquisitions and the impact of institutional environment
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Resumo(s)
This paper uses an empirical event-study approach to investigate the effect of acquisition
announcements on the share price of bidding firms. By using a globalised set of acquirers from
14 different markets, this work aims to develop an understanding of the impact of acquisition
announcements on developed- and emerging-market acquirers. The sample contains 624
acquisition announcements with target firms located throughout the world between 1997 and
2015. The results contradict the conventional wisdom that developed-market acquirers
generally experience losses. Both emerging-market and developed-market bidders gain
significantly in the short term. Moreover, for developed-market acquirers, the announcement
of cross-border acquisitions (CBAs) yields higher abnormal returns than the announcement of
domestic acquisitions. On the other hand, emerging-market bidders gain from announcing
domestic acquisitions, and lose substantially when publishing news about CBAs. In addition,
the institutional environment is found to have an impact on acquirer returns.
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Palavras-chave
Acquisitions Abnormal returns Cross-border acquisitions Institutional environment