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The Stock Market Reaction to Merger and Acquisition Announcements in Liner Shipping

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  • Photis M Panayides
  • Xihe Gong

Abstract

The importance of mergers and acquisitions as strategies pursued towards the achievement of the organisational objectives of contemporary ocean liner carriers is evidenced by the increasing number of such activities in recent years. Despite the topicality of the issues and their practical significance, there has not been a systematic investigation of the effects that the announcement of such events might have on the stock price of the companies involved. The aim of this paper is to empirically investigate the reaction of the stock market to the announcement by listed liner shipping companies of a planned merger or acquisition. This research aim is achieved through the application of the standard market model in an event study. The methodology is well established in finance studies, but has not been applied to the shipping industry. The results obtained from a number of analytical tests provide support to the hypothesis that the announcement of a merger or acquisition has significant impact on the stock price behaviour of the liner companies involved. Managerial and research implications resulting from the study are also presented.International Journal of Maritime Economics (2002) 4, 55–80 doi: 10.1057/palgrave.ijme.9100030

Suggested Citation

  • Photis M Panayides & Xihe Gong, 2002. "The Stock Market Reaction to Merger and Acquisition Announcements in Liner Shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 4(1), pages 55-80, March.
    • Handle: RePEc:pal:marecl:v:4:y:2002:i:1:p:55-80
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    Citations

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    Cited by:

    1. Andreou, Panayiotis C. & Louca, Christodoulos & Panayides, Photis M., 2012. "Valuation effects of mergers and acquisitions in freight transportation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(6), pages 1221-1234.
    2. Alexandridis, George & Kavussanos, Manolis G. & Kim, Chi Y. & Tsouknidis, Dimitris A. & Visvikis, Ilias D., 2018. "A survey of shipping finance research: Setting the future research agenda," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 115(C), pages 164-212.
    3. Grammenos, Costas Th. & Papapostolou, Nikos C., 2012. "US shipping initial public offerings: Do prospectus and market information matter?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(1), pages 276-295.
    4. Alexandrou, George & Gounopoulos, Dimitrios & Thomas, Hardy M., 2014. "Mergers and acquisitions in shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 61(C), pages 212-234.
    5. Ibrahim Mohammed & Chioma Nwafor, 2014. "Stock Market Consequences of the Suspension of the Central Bank of Nigeria’s Governor," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 12(4 (Winter), pages 371-394.
    6. Cullinane, Kevin, 2004. "1. Editorial: Key Themes In Shipping Economics Research," Research in Transportation Economics, Elsevier, vol. 12(1), pages 1-17, January.
    7. Panayides, Photis M. & Wiedmer, Robert, 2011. "Strategic alliances in container liner shipping," Research in Transportation Economics, Elsevier, vol. 32(1), pages 25-38.
    8. Oliver Ebneth & Ludwig Theuvsen, 2007. "Large mergers and acquisitions of European brewing groups-event study evidence on value creation," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 377-406.
    9. Stephen X. H. Gong, 2008. "Event Study in Transport Research: Methodology and Applications," Transport Reviews, Taylor & Francis Journals, vol. 29(2), pages 207-222, May.
    10. Alexandridis, George & Antypas, Nikolaos & Gulnur, Arman & Visvikis, Ilias, 2020. "Corporate financial leverage and M&As choices: Evidence from the shipping industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).
    11. Syriopoulos, Theodore C., 2007. "Chapter 6 Financing Greek Shipping: Modern Instruments, Methods and Markets," Research in Transportation Economics, Elsevier, vol. 21(1), pages 171-219, January.
    12. Gavalas, Dimitris & Syriopoulos, Theodoros & Tsatsaronis, Michael, 2022. "COVID–19 impact on the shipping industry: An event study approach," Transport Policy, Elsevier, vol. 116(C), pages 157-164.
    13. Arman Gülnur & Nikolaos Antypas, 2023. "Favourable funding conditions: friend or foe of shipping M&As?," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 25(4), pages 728-754, December.

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