European mega deals during the sixth merger wave. Is the legal origin of the bidder and the target a determinant of short-term investor reaction?
Author
Monica Martinez-Blasco – (IQS School of Management-Universitat Ramon Llull – Economics and Finance)
Francesc Martori – (IQS School of Management-Universitat Ramon Llull – Economics and Finance)
Xavier Auguets-Pratsobrerroca – (IQS School of Management-Universitat Ramon Llull – Economics and Finance)
Received February 5, 2018; accepted March 6, 2018
Abstract
In the context of the mega merger and acquisition announcements during the sixth merger wave in Continental Europe, this paper presents an analysis of the influence of the bidder and target legal origins in the short-term reactions of the cumulative abnormal returns, the cumulative absolute abnormal returns and the volume traded. 92 bids occurred between 2003 and 2007 have studied. Our main result is a short term negative abnormal return for the bidder stockholders’ firms as a consequence of the announcement, which can be mainly associated to the presence of companies whose legal origin is German. This reaction is also accompanied with a significant effect above the average level in the market volatility and the volume traded. Finally, there does not seem to be any significant different reaction depending on whether operations happen between companies from the same legal origin or from a different one.
En el contexto de los mega anuncios de fusiones y adquisiciones durante la sexta ola de fusiones en Europa continental, este documento presenta un análisis de la influencia del licitador y los orígenes legales objetivo en las reacciones a corto plazo de los retornos anormales acumulativos, el anormal absoluto acumulado vuelve y el volumen negociado. Se han estudiado 92 ofertas entre 2003 y 2007. Nuestro principal resultado es un rendimiento anormal negativo a corto plazo para las firmas de accionistas licitadores como consecuencia del anuncio, que puede estar asociado principalmente a la presencia de empresas cuyo origen legal es el alemán. Esta reacción también se acompaña de un efecto significativo por encima del nivel promedio en la volatilidad del mercado y el volumen negociado. Finalmente, no parece haber ninguna reacción diferente significativa dependiendo de si las operaciones ocurren entre compañías del mismo origen legal o de una diferente.
Citation
Martinez-Blasco, M., Martori, F., & Auguets, X. (2018). European Mega Deals During the Sixth Merger Wave. Is the Legal Origin of the Bidder and the Target a Determinant of Short-Term Investor Reaction?. IEuropean Accounting and Management Review, 4(2), 29-60.
Figures
Keywords
- M&As
- Mega deals
- Continental Europe
- Announcement effects
- Legal origin
Keywords
- M&As
- Mega acuerdos
- Europa Continental
- Efectos del anuncio
- Origen Legal
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