Target shareholder gains, peer firm values, and merger and acquisition announcements

2020 ◽  
Author(s):  
Sangwon Lee
Keyword(s):  
Merger And Acquisition ◽  
Acquisition Announcements

scholarly journals Impact of Merger and Acquisition Announcements on Stock Return, Volatility and Liquidity of Acquirers: Evidence from the Indian Banking Sector

2020 ◽  
Vol 19 (1) ◽  
Author(s):  
Pinky Mal ◽  
Keyword(s):  
Event Study ◽  
Stock Prices ◽  
Stock Return ◽  
Banking Sector ◽  
Abnormal Returns ◽  
Merger And Acquisition ◽  
Stock Volatility ◽  
Study Methodology ◽  
Acquisition Announcements ◽  
Event Study Methodology

This study attempts to examine the stock behaviour of acquirer banks during pre and post-merger and acquisition (M&A) announcement period in the Indian banking sector. Data of M&A events that took place in the Indian banking sector during 2000-2018 was collected from the prowessdx database. The sample consisted of 31 merger and 351 acquisition announcements during 2000-2018 in the Indian Banking sector. Stock prices of sample banks were extracted from the NSE for an event window of -10 to +10 days and the event study methodology was used for analysis. The results suggest that shareholders of Indian acquirer banks generate small and insignificant abnormal returns from M&A deals. Return variability was also noticed from the curvy jumps in the average abnormal spread of returns during the announcement period. Whereas, the average abnormal change in liquidity witnessed a sharp hike on day 0 i.e. the date of deal announcement and it remained negative throughout the post-deal period. KEYWORDS: Mergers and Acquisitions, Stock Return, Stock Volatility, Stock Liquidity, Event Study Methodology.

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