The Information Impact of the European Commission Interventions in the Field of Merger and Acquisition Monitoring: The Economics Behind Information Flow Coming to the Market

29 Pages Posted: 25 May 2001

See all articles by Nihat Aktas

Nihat Aktas

WHU - Otto Beisheim School of Management

Eric de Bodt

NHH-Caltech

Michel Levasseur

University of Lille II

Date Written: April 21, 2001

Abstract

An information flow over a period of time can affect the market in two ways: the value of the concerned assets and the degree of heterogeneity of investor anticipations. In this paper, we focus on the second aspect through the study of the information flow generated by European Commission interventions in the field of merger and acquisition monitoring. Our question is the following: does the information flow coming from the Directorate General of Competition create heterogeneity among investors on the market about the valuation of the concerned asset? We use a sample of 74 firms involved in 45 contested merger and acquisition operations during the years 1990 to 1999. Our methodology is based on the GARCH framework. The main result is that no systematic statistically significant increase in heterogeneity can be attributed to the activities of the European Commission. We conclude that the communication of information to the market by the Directorate General of Competition is done efficiently.

Keywords: heterogeneity, flow of information, event studies, (G)ARCH

JEL Classification: G10, G14, G18, G34

Suggested Citation

Aktas, Nihat and de Bodt, Eric and Levasseur, Michel G., The Information Impact of the European Commission Interventions in the Field of Merger and Acquisition Monitoring: The Economics Behind Information Flow Coming to the Market (April 21, 2001). Available at SSRN: https://ssrn.com/abstract=268970 or http://dx.doi.org/10.2139/ssrn.268970

Nihat Aktas (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Eric De Bodt

NHH-Caltech ( email )

18B AVENUE BECHET
Kraainem, 1950
Belgium
+32 475 24 01 69 (Phone)

HOME PAGE: http://www.edebodt.eu

Michel G. Levasseur

University of Lille II ( email )

Lille Cedex, 59020
France

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