IDEAS home Printed from https://ideas.repec.org/a/bor/iserev/v12y2011i47p19-42.html
   My bibliography  Save this article

Stock Price Reactions to Merger Announcements:Evidence from Istanbul Stock Exchange (ISE)

Author

Listed:
  • Berna Kirkulak Uludag
  • Ozlem Demirkaplan Gulbudak

Abstract

The stock price performances of the ISE listed non-financial firms are examined before and after the merger announcements by employing cumulative average abnormal returns (CAARs) from 1997 to 2006. In Turkey, merger and acquisitions (M&As) intensified in particular after the 2001 financial crisis. Consistent with the previous studies, the findings suggest that the stock prices prior to merger announcements are likely to increase. However, this positive effect disappears following the merger announcements and the post-merger stocks underperform in the long-run. Investors’ sentiment (optimism) explains the post-merger underperformance anomaly. Furthermore, a benchmark of control firms is constructed according to size and growth potential. The findings reveal the fact that bidding firms perform better than non-merged firms in the long-run.

Suggested Citation

  • Berna Kirkulak Uludag & Ozlem Demirkaplan Gulbudak, 2011. "Stock Price Reactions to Merger Announcements:Evidence from Istanbul Stock Exchange (ISE)," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 12(47), pages 19-42.
    • Handle: RePEc:bor:iserev:v:12:y:2011:i:47:p:19-42
    as

    Download full text from publisher

    File URL: http://www.borsaistanbul.com/datum/imkbdergi/EN/ISE_Review_47.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sonnemans, Joep & Tuinstra, Jan, 2010. "Positive expectations feedback experiments and number guessing games as models of financial markets," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 964-984, December.
    2. Ohtsubo, Yohsuke & Rapoport, Amnon, 2006. "Depth of reasoning in strategic form games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(1), pages 31-47, February.
    3. Sutter, Matthias, 2005. "Are four heads better than two? An experimental beauty-contest game with teams of different size," Economics Letters, Elsevier, vol. 88(1), pages 41-46, July.
    4. Nagel, Rosemarie, 1995. "Unraveling in Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 85(5), pages 1313-1326, December.
    5. Weber, Roberto A., 2003. "'Learning' with no feedback in a competitive guessing game," Games and Economic Behavior, Elsevier, vol. 44(1), pages 134-144, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:bor:iserev:v:12:y:2012:i:47:p:1-18 is not listed on IDEAS
    2. repec:bor:iserev:v:12:y:2012:i:47:p:19-42 is not listed on IDEAS
    3. Bekir Elmas, 2011. "The Effect of Foreign Portfolio Investments in the ISE: An Index-Based Study," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 12(47), pages 1-18.
    4. U. Baris Urhan & Zafer Akin, 2011. "A Game Theoretic Approach to Model Financal Markets: Guessing Game," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 12(47), pages 43-74.
    5. repec:bor:iserev:v:12:y:2012:i:47:p:43-74 is not listed on IDEAS
    6. Zafer Akin, 2023. "Asymmetric guessing games," Theory and Decision, Springer, vol. 94(4), pages 637-676, May.
    7. Martin G. Kocher & Matthias Sutter & Florian Wakolbinger, 2007. "The Impact of Naïve Advice and Observational Learning in Beauty-contest Games," Tinbergen Institute Discussion Papers 07-015/1, Tinbergen Institute.
    8. Henning Hermes & Daniel Schunk, 2022. "If you could read my mind–an experimental beauty-contest game with children," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 229-253, February.
    9. Sonnemans, Joep & Tuinstra, Jan, 2010. "Positive expectations feedback experiments and number guessing games as models of financial markets," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 964-984, December.
    10. Kocher, Martin & Strau[ss], Sabine & Sutter, Matthias, 2006. "Individual or team decision-making--Causes and consequences of self-selection," Games and Economic Behavior, Elsevier, vol. 56(2), pages 259-270, August.
    11. Martin Kocher & Matthias Sutter & Florian Wakolbinger, 2014. "Social Learning in Beauty‐Contest Games," Southern Economic Journal, John Wiley & Sons, vol. 80(3), pages 586-613, January.
    12. Morone, A. & Morone, P. & Germani, A.R., 2014. "Individual and group behaviour in the traveler's dilemma: An experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 49(C), pages 1-7.
    13. Cars Hommes & Anita Kopányi-Peuker & Joep Sonnemans, 2021. "Bubbles, crashes and information contagion in large-group asset market experiments," Experimental Economics, Springer;Economic Science Association, vol. 24(2), pages 414-433, June.
    14. Mariano Runco, 2013. "Estimating depth of reasoning in a repeated guessing game with no feedback," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 402-413, September.
    15. Baethge, Caroline, 2016. "Performance in the beauty contest: How strategic discussion enhances team reasoning," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe B-17-16, University of Passau, Faculty of Business and Economics.
    16. Tiziana Assenza & Te Bao & Cars Hommes & Domenico Massaro, 2014. "Experiments on Expectations in Macroeconomics and Finance," Research in Experimental Economics, in: Experiments in Macroeconomics, volume 17, pages 11-70, Emerald Group Publishing Limited.
    17. Robert Slonim, 2005. "Competing Against Experienced and Inexperienced Players," Experimental Economics, Springer;Economic Science Association, vol. 8(1), pages 55-75, April.
    18. Timo Ehrig & Jaison Manjaly & Aditya Singh & Shyam Sunder, 2022. "Adaptive Rationality in Strategic Interaction: Do Emotions Regulate Thinking About Others?," Strategy Science, INFORMS, vol. 7(4), pages 330-349, December.
    19. Choo, Lawrence C.Y & Kaplan, Todd R., 2014. "Explaining Behavior in the "11-20" Game," MPRA Paper 52808, University Library of Munich, Germany.
    20. John Duffy & Te Bao, 2013. "Adaptive vs. Eductive Learning: Theory and Evidence," Working Paper 518, Department of Economics, University of Pittsburgh, revised Dec 2013.
    21. Kocher, Martin G. & Sutter, Matthias, 2006. "Time is money--Time pressure, incentives, and the quality of decision-making," Journal of Economic Behavior & Organization, Elsevier, vol. 61(3), pages 375-392, November.
    22. Bodo Herzog & Stefanie Schnee, 2022. "Exploring a Dualism of Human Rationality: Experimental Study of a Cheating Contest Game," IJERPH, MDPI, vol. 19(13), pages 1-13, June.
    23. Ciril Bosch-Rosa & Thomas Meissner, 2020. "The one player guessing game: a diagnosis on the relationship between equilibrium play, beliefs, and best responses," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1129-1147, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bor:iserev:v:12:y:2011:i:47:p:19-42. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ahmet Palu (email available below). General contact details of provider: https://edirc.repec.org/data/rdisetr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.