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Announcement Of The Exchange Ratio Of The Merging Companies - Impact On The Acquiring Firms "

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  • Leszek Czerwonka

    (Faculty of Economics University of Gdansk Gdansk, Poland")

Abstract

In merger transactions the value of the share exchange ratio is essential, because it affects the distribution of the benefits of the merger. The aim of this study is to analyze the impact of announcements of the agreed by boards share exchange ratios on the valuation of shares of companies involved in the merger as acquiring companies. The method used for measuring the impact of exchange ratio announcement on the share prices is the event study, in which the abnormal rates of return were counted, showing the extent to which the actual rates of return on shares of the merging companies are different from the expected rates of return that would occur if there was no any extraordinary event, such as announcement of the merger plan. Previous studies indicate that the acquiring companies on average did not gain in mergers. "

Suggested Citation

  • Leszek Czerwonka, 2011. "Announcement Of The Exchange Ratio Of The Merging Companies - Impact On The Acquiring Firms "," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 58, pages 83-90, november.
    • Handle: RePEc:aic:journl:y:2011:v:57:p:83-90
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    References listed on IDEAS

    as
    1. Lars-Hendrik Röller & Johan Stennek & Frank Verboven, 2006. "Efficiency Gains from Mergers," Chapters, in: Fabienne IIzkovitz & Roderick Meiklejohn (ed.), European Merger Control, chapter 3, Edward Elgar Publishing.
    2. Sung C. Bae & Sivagnanam Sakthivel, 2000. "An Empirical Analysis of Exchange Ratio Determination Models for Merger: A Note," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 27(3‐4), pages 511-521, April.
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    7. Sung C. Bae & Sivagnanam Sakthivel, 2000. "An Empirical Analysis of Exchange Ratio Determination Models for Merger: A Note," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 27(3&4), pages 511-521.
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    More about this item

    Keywords

    merger; acquisition; exchange ratio; asset pricing; event study;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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