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The Impact Of Acquisitions On New Technology Stocks: The Google–Motorola Case



    (School of Management, Fudan University, 670, Guoshun Road, Shanghai 200433, P. R. China)


    (Department of Quantitive Finance, National Tsing Hua University, Taiwan;
    CORE, Université Catholique de Louvain, 1348, Louvain La Neuve, Belgium)


    (ISBA and CORE, Université Catholique de Louvain, 1348, Louvain La Neuve, Belgium)


This paper analyzes the impact of the recent acquisition of Motorola by Google on the subsequent performance of stock returns using an event study methodology. We obtain empirical results by a two-stage regression, by which the impact of market and industry effects can be controlled for. Our findings suggest that the Motorola takeover led to negative and significant excess returns to Google, but positive and highly significant excess returns to Motorola. Additionally, while the event led to significantly positive excess returns to direct competitors, it did not have a strong impact on indirect competitors, suggesting that the importance of the event was restricted to related industries.

Suggested Citation

  • Renfei Gao & Cindy S. H. Wang & Christian M. Hafner, 2014. "The Impact Of Acquisitions On New Technology Stocks: The Google–Motorola Case," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 9(02), pages 1-23.
  • Handle: RePEc:wsi:afexxx:v:09:y:2014:i:02:n:s2010495214400028
    DOI: 10.1142/S2010495214400028

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    More about this item


    Impact of acquisition; event study approach; stock returns; abnormal returns; C58; G14; G34;

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • 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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