Merger announcement and intra-industry stock price effect

• Main Authors: Lu Shao-Wei, 呂紹瑋
• Other Authors: Shu Liang
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/v6v2t9

碩士 === 東吳大學 === 國際經營與貿易學系 === 96 === This thesis attempts to examine the change of intra-industry stock abnormal returns after the merger announcements in Taiwan. The sample includes 108 merger announcements from firms listed on the Taiwan Stock Exchange. The sample period is from 1996 to 2007. The author uses market model of event study methodology to analyze the merger announcement effect to acquirers, acquirer’s industrial rivals and target’s industrial rivals. The empirical results are as follows: First, the evidence shows that the stocks of acquirers will have significantly positive abnormal returns after the merger announcements. It is because mergers may improve the resource allocation and reach the management or operation synergy. As a consequence, our finding supports the value increasing theory. Secondly, the empirical results show that the stocks of acquirer’s rivals will have significantly negative abnormal returns after the merger announcements. It is because mergers may increase acquirer’s level of competitiveness and decrease the rivals’. This evidence supports the competitive advantage hypothesis. As for rivals of the target companies, there is another viewpoint. Mergers may increase the chance of rivals to become the target company. It supports the signaling hypothesis. The rivals of target firms will have significantly positive abnormal returns after the merger announcements.