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The effect of acquisition announcements on Stock returns of acquiring firms for developed and emerging countries focusing on domestic and cross-border acquisitions

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Abstract:

By using a multi-country set of acquirers from 14 different markets, this work aims to develop a global understanding of the impact of acquisition announcements on developed- and emerging-market acquirers. This paper uses an empirical event-study approach to investigate the effect of acquisition announcements on the share price of bidding firms. 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 level of institutional environment in the target country is found to have an impact on acquirer returns.
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Author's Keywords:

Acquisitions, Abnormal Returns, Cross-border Acquisitions, Institutional Environment
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Association:
Name: BALAS
URL:
http://http://www.balas.org/


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URL: http://citation.allacademic.com/meta/p1368488_index.html
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MLA Citation:

Sampaio, Joelson. and Otto, Florian. "The effect of acquisition announcements on Stock returns of acquiring firms for developed and emerging countries focusing on domestic and cross-border acquisitions" Paper presented at the annual meeting of the BALAS, University of San Diego, San Diego, USA, Mar 21, 2018 <Not Available>. 2018-10-15 <http://citation.allacademic.com/meta/p1368488_index.html>

APA Citation:

Sampaio, J. and Otto, F. , 2018-03-21 "The effect of acquisition announcements on Stock returns of acquiring firms for developed and emerging countries focusing on domestic and cross-border acquisitions" Paper presented at the annual meeting of the BALAS, University of San Diego, San Diego, USA Online <APPLICATION/PDF>. 2018-10-15 from http://citation.allacademic.com/meta/p1368488_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: By using a multi-country set of acquirers from 14 different markets, this work aims to develop a global understanding of the impact of acquisition announcements on developed- and emerging-market acquirers. This paper uses an empirical event-study approach to investigate the effect of acquisition announcements on the share price of bidding firms. 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 level of institutional environment in the target country is found to have an impact on acquirer returns.


 
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