The efficient market theory is a central point in finance. If the capital market is competitive, the investors cannot expect superior gains from their investment strategies with respect to the risk profile. Event stud...The efficient market theory is a central point in finance. If the capital market is competitive, the investors cannot expect superior gains from their investment strategies with respect to the risk profile. Event studies are an approach to verify the impact of the information on the stock prices. In an efficient market, stock prices should fully, promptly, and quickly capture all the information. Instead, the market shows phenomena of an under-reaction and over-reaction for both the short and the long run. The mergers and acquisitions （M＆As） are examples of anomalies. Often, the bidder companies record the negative abnormal returns for both the short and the long run. In contrast to the efficient market theory, the empirical evidence shows that this phenomenon is widespread in all （or most of） the countries of the world. This work examines the long-run performance in M＆As. For this purpose, 40 bidders were observed in Italy during the period of 1994-2008 among listed companies. The buy and hold abnormal returns （BHARs） methodology was used, with which it was possible to observe the returns for three years following the deal.展开更多
Although Brazil has a long history of having insider trading laws （IT laws） in place and became the first emerging country to enforce the IT laws （Bhattacharya ＆ Daouk, 2002）, criminal sanctions and hefty monetar...Although Brazil has a long history of having insider trading laws （IT laws） in place and became the first emerging country to enforce the IT laws （Bhattacharya ＆ Daouk, 2002）, criminal sanctions and hefty monetary penalties were only made possible by the amendment of its laws against IT on October 31, 2001. We study the stock price effects of merger announcements made by 151 firms over two periods, before and after the change of IT laws. Our empirical results suggest that target firms attained positive price run-ups in pre-announcement windows before, but not after, the legal regime change. While acquiring firms had strong positive pre-announcement reactions in both legal regimes, the abnormal returns （AR） decreased in the more stringent legal regime. These results indicate that more stringent IT laws may deter IT and improve market efficiency in an emerging country.展开更多
文摘The efficient market theory is a central point in finance. If the capital market is competitive, the investors cannot expect superior gains from their investment strategies with respect to the risk profile. Event studies are an approach to verify the impact of the information on the stock prices. In an efficient market, stock prices should fully, promptly, and quickly capture all the information. Instead, the market shows phenomena of an under-reaction and over-reaction for both the short and the long run. The mergers and acquisitions （M＆As） are examples of anomalies. Often, the bidder companies record the negative abnormal returns for both the short and the long run. In contrast to the efficient market theory, the empirical evidence shows that this phenomenon is widespread in all （or most of） the countries of the world. This work examines the long-run performance in M＆As. For this purpose, 40 bidders were observed in Italy during the period of 1994-2008 among listed companies. The buy and hold abnormal returns （BHARs） methodology was used, with which it was possible to observe the returns for three years following the deal.
文摘Although Brazil has a long history of having insider trading laws （IT laws） in place and became the first emerging country to enforce the IT laws （Bhattacharya ＆ Daouk, 2002）, criminal sanctions and hefty monetary penalties were only made possible by the amendment of its laws against IT on October 31, 2001. We study the stock price effects of merger announcements made by 151 firms over two periods, before and after the change of IT laws. Our empirical results suggest that target firms attained positive price run-ups in pre-announcement windows before, but not after, the legal regime change. While acquiring firms had strong positive pre-announcement reactions in both legal regimes, the abnormal returns （AR） decreased in the more stringent legal regime. These results indicate that more stringent IT laws may deter IT and improve market efficiency in an emerging country.
