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The Effects of Acquisitions on the Value of Rivals in a Winner-Take-Mostt Economy

Author

Listed:
  • Frannois Derrien
  • Laurent Frrsard
  • Victoria Slabik
  • Philip Valta

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

Abstract

Average stock price reactions of industry rivals in horizontal U.S. mergers and acquisitions around deal announcements are robustly negative. This finding is in contrast to the results in the existing literature, which focuses on smaller samples of deals involving mostly publicly listed firms. Rivals' returns are more negative in growing and concentrated industries. Moreover, the negative rivals' stock price reactions are related to future decreases in operating performance, increased probability of bankruptcy and challenges by antitrust authorities, and increased probability of rivals' future acquisitions. Overall, these results suggest that M&As have strong competitive effects for the rivals of target companies.

Suggested Citation

  • Frannois Derrien & Laurent Frrsard & Victoria Slabik & Philip Valta, 2017. "The Effects of Acquisitions on the Value of Rivals in a Winner-Take-Mostt Economy," Working Papers hal-01970731, HAL.
    • Handle: RePEc:hal:wpaper:hal-01970731
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    Keywords

    M&As;

    Statistics

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