Market Reaction to Acquisition Announcements after the 2008 Stock Market Crash

The International Journal of Business and Finance Research, v. 8 (4) p. 75-82, 2014

8 Pages Posted: 12 Dec 2014

See all articles by Ozge Uygur

Ozge Uygur

Rowan University

Gulser Meric

Rowan University - Accounting & Finance

Ilhan Meric

Rider University

Date Written: 2014

Abstract

Market reaction to mergers and acquisitions is a popular research topic in finance. It has been well documented in empirical literature that target companies earn significant abnormal market returns in corporate acquisitions. However, the effects of stock market crashes, and the effects of whether the acquirer is a domestic firm or a foreign firm, on target firm abnormal returns have not been studied sufficiently. In this paper, we make a contribution to the extant literature on these subjects by studying the abnormal market returns earned by U.S. target firms acquired by domestic and foreign firms after the 2008 stock market crash. Our test results indicate that U.S. targets that were acquired by other U.S. firms earned significantly higher abnormal returns, compared with targets acquired by foreign firms, after the crash. We also find that the target companies earned greater abnormal returns in non-friendly acquisitions than in friendly acquisitions during this period.

Keywords: Financial Crisis, Mergers and Acquisitions

JEL Classification: G01; G34

Suggested Citation

Uygur, Ozge and Meric, Gulser and Meric, Ilhan, Market Reaction to Acquisition Announcements after the 2008 Stock Market Crash (2014). The International Journal of Business and Finance Research, v. 8 (4) p. 75-82, 2014, Available at SSRN: https://ssrn.com/abstract=2455955

Ozge Uygur (Contact Author)

Rowan University ( email )

201 Mullica Hill Road
Glassboro, NJ 08028
United States
856-256-3478 (Phone)

HOME PAGE: http://users.rowan.edu/~uygur/

Gulser Meric

Rowan University - Accounting & Finance ( email )

Glassboro, NJ 08028
United States

Ilhan Meric

Rider University ( email )

2083 Lawrenceville Road
Lawrenceville Township, NJ 08648
United States

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