Spillover Effect of M&A Announcements on Acquiring Firms’ Rivals: Evidence from India
Material type:
TextDescription: 692–707 pSubject(s):
In:
BANIK, ARINDAM GLOBAL BUSINESS REVIEWSummary: Motivated by the paucity of empirical studies examining the impact of mergers and acquisition (M&A) announcements on the acquiring firms’ rivals, we made an attempt to uncover the spillover effect of M&A announcements on the stock market reaction of acquiring firms’ rivals. Using a sample of 97 M&A announcements during the period from April 2014 to March 2016 and 179 rivals of acquirers, we found that acquiring firms and acquiring firms’ rivals react positively to the announcement of M&As. The results of the disaggregated analysis suggest that horizontal M&As do not result in a significant positive reaction of acquiring firms’ rivals. Therefore, this study does not support the collusion theory. We also found negative (insignificant) stock market reaction of acquiring firms’ rivals upon the announcement of cross-border M&As. However, overall results show that acquiring firms’ rivals react positively to the announcement of M&As. This significant positive reaction of acquiring firms’ rivals goes in line with signalling theory. Thus, we argue that M&A announcements signal information regarding the growth potential of rivals, which results in positive stock market reaction of acquiring firms’ rivals upon the M&A announcements.
| Item type | Current library | Call number | Vol info | Status | Notes | Date due | Barcode | Item holds | |
|---|---|---|---|---|---|---|---|---|---|
Journal Article
|
Main Library | Vol 20, No 3/ 55510583JA8 (Browse shelf(Opens below)) | Available | 55510583JA8 | |||||
Journals and Periodicals
|
Main Library On Display | JP/GEN/Vol 20, No 3/55510583 (Browse shelf(Opens below)) | Vol 20, No 3 (10/05/2019) | Not for loan | June, 2019 | 55510583 |
Browsing Main Library shelves Close shelf browser (Hides shelf browser)
| No cover image available | No cover image available | No cover image available | No cover image available | No cover image available | No cover image available | No cover image available | ||
| Vol 20, No 3/ 55510583JA4 Predicting Financially Distressed Small- and Medium-sized Enterprises in Malaysia | Vol 20, No 3/ 55510583JA5 The Influence of Internal Corporate Governance on Bank Credit Risk: An Empirical Analysis for Tunisia | Vol 20, No 3/ 55510583JA7 Does the Five-Factor Asset Pricing Model Have Sufficient Power? | Vol 20, No 3/ 55510583JA8 Spillover Effect of M&A Announcements on Acquiring Firms’ Rivals: Evidence from India | Vol 20, No 3/ 55510583JA9 Quality of Life @ Palava Smart City: A Case Study | Vol 20, No 3/ 5559440JA1 Involvement of Community Leaders in Addressing Unmet Need for Family Planning in Rural Coastal Odisha | Vol 20, No 3/ 5559440JA12 Birth Preparedness among Women and Factors Associated with Antenatal Care A Study in Vikramgad, Maharashtra (India) |
Motivated by the paucity of empirical studies examining the impact of mergers and acquisition (M&A) announcements on the acquiring firms’ rivals, we made an attempt to uncover the spillover effect of M&A announcements on the stock market reaction of acquiring firms’ rivals. Using a sample of 97 M&A announcements during the period from April 2014 to March 2016 and 179 rivals of acquirers, we found that acquiring firms and acquiring firms’ rivals react positively to the announcement of M&As. The results of the disaggregated analysis suggest that horizontal M&As do not result in a significant positive reaction of acquiring firms’ rivals. Therefore, this study does not support the collusion theory. We also found negative (insignificant) stock market reaction of acquiring firms’ rivals upon the announcement of cross-border M&As. However, overall results show that acquiring firms’ rivals react positively to the announcement of M&As. This significant positive reaction of acquiring firms’ rivals goes in line with signalling theory. Thus, we argue that M&A announcements signal information regarding the growth potential of rivals, which results in positive stock market reaction of acquiring firms’ rivals upon the M&A announcements.
There are no comments on this title.