M&A Announcements in Australia and Their Impact on Competitors

22 Pages Posted: 5 Jun 2017

See all articles by Fabio Parlapiano

Fabio Parlapiano

Bank of Italy; Sapienza, University of Rome; TSBE - Tasmanian School of Business

Vitali Alexeev

University of Tasmania; Financial Research Network (FIRN)

Date Written: November 15, 2013

Abstract

We investigate the impact of M&A announcements by Australian companies on the market value of their rivals. We find that only the immediate competitor is affected, recording significant negative abnormal returns. This adjustment takes three to four weeks around the announcement day with some degree of anticipation. In contrast, M&A announcements benefit the acquirers instantaneously increasing their market value. We show that larger rivals are less concerned by announcements made by smaller or glamour acquirers as their capacity to compete with the newly merged entity is not diminished and benefits from collusion are perceived as non-significant.

Keywords: M&A, Event study, Rivals, Australian firms.

JEL Classification: G34, C58.

Suggested Citation

Parlapiano, Fabio and Alexeev, Vitali, M&A Announcements in Australia and Their Impact on Competitors (November 15, 2013). Available at SSRN: https://ssrn.com/abstract=2980654 or http://dx.doi.org/10.2139/ssrn.2980654

Fabio Parlapiano (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

HOME PAGE: http://www.bancaditalia.it/

Sapienza, University of Rome ( email )

Via del Castro Laurenziano, 9
Rome, Rome 00161
Italy

HOME PAGE: http://https://web.uniroma1.it/dip_management/

TSBE - Tasmanian School of Business ( email )

Private Bag 84
Hobart, TAS 7001
Australia

HOME PAGE: http://www.utas.edu.au/business-and-economics/home

Vitali Alexeev

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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