Stock Price Performances of Target Firms in Unsuccessful Acquisitions

36 Pages Posted: 5 Aug 2005

See all articles by Ettore Croci

Ettore Croci

Catholic University of the Sacred Heart of Milan

Date Written: July 2006

Abstract

This paper examines the stock price returns of 459 targets in unsuccessful M&A deals from 1990 to 2001. An information hypothesis that includes new information arrived after the M&A proposal explains better than the synergy hypothesis the evidence for failed acquisitions. The average abnormal return announcement to termination is a negative 10.61%. Abnormal returns vary according to the identity of the party who terminates the deal. When the target firm rejects a deal, the target stock price drops by 4.33%. The loss is 14.49% when the bidder terminates the deal. In the long-run, abnormal returns are generally insignificant.

Keywords: M&A, unsuccessful acquisitions, failed mergers, target firm, event study

JEL Classification: G34

Suggested Citation

Croci, Ettore, Stock Price Performances of Target Firms in Unsuccessful Acquisitions (July 2006). Available at SSRN: https://ssrn.com/abstract=766304 or http://dx.doi.org/10.2139/ssrn.766304

Ettore Croci (Contact Author)

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
580
Abstract Views
2,722
rank
47,513
PlumX Metrics