Merger Announcement Research Articles

Indonesian Capital Market Investors' Reaction To The Events At Bank Syariah Indonesia

This study aims to analyze whether there are differences in internal and external events in abnormal profits, trading volume activity, and foreign investment in the stock market for BRIS issuers since the merger announcement and the ratification of the Bank Syariah Indonesia merger. This study is quantitative, where the data processed is secondary data from various sources. Several events during the merger period were collected from October 2020 to February 2021, and 11 events were obtained. This study divides the events into two groups and tests 5 internal and 6 external events with an event window of 11 days. The method used in this study is a different test using the Wilcoxon sign rank test and sample paired t-test, depending on the normal test results. The results of group testing events show no difference before and after internal and external events in abnormal profits, trading volume activity, and foreign investment. However, when viewed from each event, the results show that trading volume activity in events 1, 7, and 11 differs before and after. For foreign investment in events 7 and 11, there are differences before and after; for the rest, there is no difference. This research can provide insight and be a reference for future research. Practically, this research can be a reference for investors when determining investment decisions.

SPACs and the COVID-19 pandemic: Evidence from Korea

We examine how the COVID-19 pandemic affected the mergers of special purpose acquisition companies (SPACs) in Korea, where SPACs—since their introduction in 2010—have played a significant role in private company public listings. After the COVID-19 outbreak, SPACs were less likely to merge, but for those which chose to do so, merger announcement returns were on average higher, particularly for those that waited to merge until after the stock market recovered its pre-pandemic value. We also find evidence that SPAC holding period returns from the SPAC’s initial public offering to merger consummation (or liquidation, in the case of SPACs that failed to complete a merger) were on average higher after the outbreak. Overall, our results suggest that, despite their limited lifespan and agency issues, SPACs may operate more efficiently and perform better during periods of economic downturn.

Speaking About Mergers and Deal Outcomes: Analyst Report Tone Surrounding Merger Announcements

Speaking About Mergers and Deal Outcomes: Analyst Report Tone Surrounding Merger Announcements

Event study methodology trends in the stock market: A systematic review based on bibliometric analysis

An event study is a statistical method used to assess the impact of an event. Most often the event study method is utilized in financial research to analyze the impact of events such as merger announcements, stock splits, earnings announcements, and economic shocks on the financial condition of an economy or industry or company. This study provides a systematic review based on bibliometric analysis using R software by using the Scopus database as a resource. The study used keywords to discover 2325 research articles from the Scopus database between 1984 and 2024. Additionally, this paper provides results with a clear explanation of publication trends, pertinent authors, relevant journals with impact factors, and global collaborations in the area of event study methods in the stock market. Along with the bibliometric results, the systematic review is carried out with highly cited and relevant publications about event study methodology on the stock market.

Social connections and information leakage: Evidence from target stock price run‐up in takeovers

AbstractDoes information leakage in a target's social networks increase its stock price prior to a merger announcement? Evidence reveals that a target with more social connections indeed experiences a higher pre‐announcement price run‐up. This effect does not exist during or after the merger announcement, or in windows ending two months before the announcement. It is more pronounced among targets with severe asymmetric information, and weaker when the information about the upcoming merger is publicly available prior to the announcement. It is also weaker in expedited deals such as tender offers.

Do CSR Firms Make Better Acquisitions? - The Case of Taiwan

This study examines the association between Corporate Social Responsibility (CSR) activities measured by two of Taiwan’s leading publishers, the Commonwealth Magazine and the Global View Magazine, and the acquirer’s short- and long-term performances after the merger announcement in Taiwan. We use CEO compensation and the firm’s free cash flow as the proxies for CEO self-confidence. We find that the acquirer’s CSR engagement is positively associated with its long-term performance but not with its short-term performance. CEO compensation is positively associated with the acquirer’s performance, especially after the mandatory establishment of the remuneration committee for publicly traded firms. However, the acquirer’s free cash flow is found negatively associated with its performance, supporting Jensen’s (Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76, 323–329) free cash flow hypothesis or CEO hubris. These findings indicate that the CSR measurements of Commonwealth Magazine and Global View Magazine do provide valuable information for CSR activities and that CSR activities do enhance firm value in the long run. Furthermore, the requirement for the establishment of the remuneration committee does improve the effectiveness of CEO compensation for firm performance in Taiwan.

Empowering tomorrow's leaders: the impact of the 15th Network of Young Researchers in Andrology (NYRA) meeting on male reproductive health and interdisciplinary collaboration.

The 15th Network of Young Researchers in Andrology (NYRA) meeting, held at the Palace de Caux, Switzerland, served as a valuable platform to disseminate cutting-edge research and facilitate interactions among early-career researchers and trainees in andrology from around the world. Preceding the 22nd European Testis Workshop, the 2-day event brought together participants from a variety of countries to discuss a range of topics pertaining to men's reproductive health and biology. Specific focuses included piRNAs in mammalian reproduction, biomolecules enhancing sperm physiology, advances in in vitro spermatogenesis, reproductive strategies across species, and career development. A dedicated 'scientific speed-dating' social event also stood out, encouraging cross-disciplinary collaborations and strengthening ties within the scientific community. The high participation rate of the meeting highlighted its value in connecting the andrology community. Finally, the announcement of NYRA's merger with the European Academy of Andrology (EAA) marked a pivotal moment, enabling NYRA to support young researchers while collaborating with the EAA to advance andrology research. The 15th NYRA meeting played a crucial role in enhancing knowledge dissemination and andrology research, empowering young researchers, and addressing key challenges in male infertility.

Do Merger Announcements Enhance the Wealth of the Shareholders? Evidence from India Banking Sector

The present study attempts to examine the impact of merger announcements on shareholders’ wealth of respective banks in the Indian banking sector. The study considers 13 mergers which include the merger of both public sector and private sector banks. Event Study Methodology has been used for the analysis purpose. The study uses both a one-factor model and a two-factor model to calculate the cumulative abnormal return in various time windows. The notable findings of the study demonstrate that the market reaction towards the merger announcement is negative in both the public and private sector banks. The impact on public sector banks is more compared to the private sector banks as the resulting Cumulative Abnormal Return (CAR) values are negative and significant. Contrary to the above findings, the shareholders of Kotak Mahindra Bank and ING Vyasa Bank have gained wealth as a result of the merger as the market has reacted positively to the merger announcement.

Effect of merger announcements on stock prices: evidence from Indian public sector banks

Effect of merger announcements on stock prices: evidence from Indian public sector banks

Are SPAC Revenue Forecasts Informative?

ABSTRACT This paper examines the informativeness of special purpose acquisition company (SPAC) revenue forecasts. We document a positive association between the compound annual growth rate in revenue forecasts and abnormal returns, retail trading, and Twitter activity in the five-day window surrounding the disclosure of a merger announcement. By contrast, we find limited evidence that institutional investors and traditional information intermediaries respond to SPAC revenue forecasts. We also find evidence that SPAC revenue forecasts positively predict future operating underperformance, stock underperformance, and class action lawsuits. Overall, our results affirm the SEC’s concerns about the attractiveness of aggressive revenue projections to retail investors. JEL Classifications: G34; G32; M40; M48.

COMPARATIVE ANALYSIS OF COMPANY PERFORMANCE BEFORE AND AFTER MERGERS AND ACQUISITIONS IN COMPANY LISTED ON IDX 2018-2021

The purpose of this study is to examine how companies trading on the Indonesia Stock Exchange fared before and after M&A deals were made in the years 2018 through 2021. In this Study, we employed a comparable quantitative approach called "purposive sampling" to collect our data. There are seven suitable businesses to use as examples. Descriptive statistics, a normality test, and the Wilcoxon signed-rank test were employed to analyze the data. There was no discernible change in the financial performance of companies listed on the Indonesia Stock Exchange (IDX) before and after the announcement of mergers and acquisitions, as measured by three financial ratios: return on assets (ROA), return on equity (ROE), and debt to equity ratio (DER), for the period of 2018-2021. Several elements, according to the findings of this research, determine the ultimate fate of mergers and acquisitions. Investors should be aware that mergers and acquisitions do not always improve business efficiency.

Green SPACs

AbstractWe examine the structural characteristics of special purpose acquisition companies (SPACs) focused on green causes. We explain their ecosystem, primary determinants of initial public offering (IPO) size, and speed of going public, and we calculate their returns around merger announcements and subsequent acquisition. Green SPAC size depends on CEO characteristics, choice of exchange and specialisation of respective stakeholders. The speed to IPO is related to the respective concentration of legal counsel. Green SPACs exhibit cumulative market‐adjusted returns in the range 6%–12% around the merger announcement. Merger returns are positive at the merger date but quickly become negative (−1% to −9%) and decline further with time.

Market Mispricing Timing and Post-acquisition Performance: Evidence from Chinese A-share Firms

This study examines the impact of market mispricing timing on the short-term and long-term performance of acquiring firms in the context of China's capital market. Using a comprehensive dataset of A-share listed companies engaged in mergers and acquisitions (M&A) between 2007 and 2021, we investigate whether M&A activities conducted during periods of market overvaluation lead to enhanced short-term performance while failing to generate sustained long-term benefits. Our findings reveal that acquisitions executed during market overvaluation exhibit significantly improved short-term stock market performance, reflecting the alignment of merger announcements with optimistic investor sentiment. However, such positive effects on short-term performance do not extend to long-term outcomes. The study underscores the critical influence of market timing on the immediate post-acquisition performance of acquiring firms but highlights its limited impact on long-term financial and market performance. These insights contribute to a better understanding of M&A behavior within the Chinese capital market, demonstrating that while capitalizing on market mispricing can yield short-term advantages, sustainable long-term gains hinge on other factors beyond market timing.

The information value of M&A press releases

How do managers comment on merger transactions? By analyzing the initial public announcements of mergers and acquisitions (M&As) from 1995 through 2020 and extracting the linguistic sentiment from statements made by managers of target and acquirer firms, we provide new evidence on the informational value of M&A disclosures. We find that positive sentiment by the target firm results in positive returns for the target. However, when the target firm disagrees with the sentiment of the acquirer, this results in lower returns for the target. Further, when the target displays positive sentiment, this increases the likelihood of merger completion and shortens the time to completion of the deal. We decompose acquirer sentiment into manipulative and fundamental components and demonstrate that acquirer CEOs with low confidence produce M&A statements that are more manipulative. This suggests that, while sentiment in M&A disclosures contains information about fundamentals and managerial attitudes, it can be manipulated to protect the personal interests of managers.

ANALISIS REAKSI PASAR TERHADAP PENGUMUMAN MERGER DAN AKUISISI PADA INDUSTRI PERBANKAN DI BURSA EFEK INDONESIA

Merger and acquisition activities are corporate action activities that often occur in Indonesia, especially in the banking sector. Merger and acquisition activities abnormal return of shares and trading volume activities (TVA). In this case the merger activity and gives a signal to investors to invest. This study aims to examine the capital market against banking industry companies that carry out mergers and acquisitions on the Indonesia Stock Exchange as seen through abnormal stock returns and TVA. There are 14 companies conducting mergers and acquisitions from 2001 to 2021 on the Indonesia Stock Exchange (IDX). The method that used by this event study with non-probability sampling method, namely purposive sampling technique. The data analysis technique used was the Wilcoxon signed rank test. The results showed that there were no significant market differences before and before the announcement of mergers and acquisitions. Another thing found is the announcement of mergers and acquisitions significant differences in TVA before and before mergers and acquisitions.

Tracing environmental sustainability footprints in cross‐border M&A activity

AbstractThis study documents the first large‐scale empirical evidence on the effects of differences in countries' environmental sustainability (ES) on cross‐border merger and acquisition (M&A) activity. Using 34,088 cross‐border mergers across 44 countries, we find that greater ES differences between acquirer and target countries stimulate the intensity of cross‐border mergers. The acquirer firms experience higher cumulative abnormal returns around merger announcements and pay higher merger premiums. Consistent with the pollution haven hypothesis, results on value effect are more pronounced for M&A deals in highly polluting industries such as petroleum, transportation and mining. The results are robust to a battery of robustness tests.

Fractal dimension analysis of stock prices of selected resulting companies after mergers and acquisitions.

This study focuses on the short-run wealth of listed firms' shareholders. Currently, all of the resulting organizations offer competitive pricing tactics to create a superior environment for our ongoing establishment. Some time ago, it was noted that a merger occurred, although some functions and technology integration remained with the previous structure. In this paper, it has been discovered that merger and acquisition deals have an impact on the firm's value; in other words, we can view it as shareholders' wealth or unit depending on the stock price after the announcement of merger and acquisition deals in the short term. Furthermore, we focused on influencing variables on stock prices after the announcement of merger and acquisition transactions, which is measured as a percentage change in the stock prices of the listed resulting firms. Furthermore, this research is based on secondary data sources from reputable organizations. It primarily uses the NSE database and website to evaluate announcements and stock prices of the twenty-nine publicly traded companies. Markets respond to investors' emotions and market expertise. When acquirers have a strong market position, market capitalization rises in other segments. However, it is declining due to a lack of supportive finances. To determine the impact of merger and acquisition announcement deals on stock price changes, average abnormal return and cumulative average abnormal return with the capital asset pricing model (CAPM) (CAPM reaction to changes) were used to identify the acquiring company's stock price reaction. We investigated its impact on the fluctuation of share prices posted on stock exchanges using fractal interpolation functions. This is due to greater investment by acquirer businesses in target companies as well as investor expectations for specific stock market strongholds.

The value of economic freedom in cross-border mergers

This study examines the impact of economic freedom in mergers and acquisitions (M&A) using a global sample of 6159 takeovers involving acquirers from 56 different countries and foreign targets from 130 countries. The results reveal that acquirers with an economic freedom advantage over their targets experience higher short-run and long-run abnormal returns after controlling for other important country and merger characteristics. At the same time, the level of economic freedom in the target country relative to the bidder country positively impacts target shareholders’ announcement wealth effects and merger premiums. The results are robust to various control variables, industry, year and country fixed effects, modifications to the target sample, and changes to the merger announcement window. These findings add to the institutional theory and suggest that differences in institutional quality, captured as economic freedom advantage, benefit bidders and targets in cross-border M&A.

The Impact Of Merger and Acquisition Announcements On Trading Volume Activity and Abnormal Stock Returns In Companies Listed On The Indonesia Stock Exchange

This study aims to analyze the differences in trading volume activity and abnormal stock returns before and after the announcement of mergers and acquisitions in companies listed on the Indonesia Stock Exchange (IDX). The research population is all companies listed on the IDX that have carried out mergers and acquisitions for the 2017-2021 period and reported them to the Komisi Pengawas Persaingan Usaha (KPPU). Then, a sample of 31 companies was selected to be studied for 10 days, namely 5 days before and 5 days after the announcement of mergers and acquisitions. The data analysis technique used in this study uses SPSS for windows. The results of the study found that there were no significant differences in trading volume activity and abnormal stock returns before and after the announcement of mergers and acquisitions in companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2021 period. Therefore, investors are expected to be more selective in choosing and analyzing information that occurs in the capital market.

Taking Over the Size Effect: Asset Pricing Implications of Merger Activity

AbstractWe show that merger announcement returns account for virtually all of the measured size premium. An empirical proxy for ex ante takeover exposure positively and robustly relates to cross-sectional expected returns. The relation between size and expected returns becomes positive or insignificant, rather than negative, conditional on this takeover characteristic. Asset pricing models that include a factor based on the takeover characteristic outperform otherwise similar models that include the conventional size factor. We conclude that the takeover factor should replace the conventional size factor in benchmark asset pricing models.