The reaction by industry insiders to M&As in the European financial industry
AbstractThis paper looks at the reaction by industry insiders, industry analysts and competing firms, to the announcement of M&As that took place in the European Union financial industry in the period 1998-2006. Analysts covering firms involved in an M&A transaction do not significantly alter their recommendation. This is consistent with the hypothesis that the transaction on average is "fairly priced" and that stock market prices reflect all relevant information on the assets. We also find that the correlation between excess returns for merging and competing firms is positive and, in some cases, significantly higher for domestic mergers than for international deals. This is consistent with the idea that domestic deals are more likely to have a negative impact on industry competition.
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Bibliographic InfoPaper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0713.
Length: 26 pages
Date of creation: May 2007
Date of revision:
mergers and acquisitions; analysts recommendations; rival firms;
Other versions of this item:
- Campa, Jose M. & Hernando, Ignacio, 2007. "The reaction by industry insiders to M&As in the European financial industry," IESE Research Papers D/689, IESE Business School.
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-02 (All new papers)
- NEP-COM-2007-06-02 (Industrial Competition)
- NEP-EEC-2007-06-02 (European Economics)
- NEP-MIC-2007-06-02 (Microeconomics)
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