M&A Announcements in Australia and Their Impact on Competitors
22 Pages Posted: 5 Jun 2017
Date Written: November 15, 2013
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: Suggested Citation