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Effects of Mergers and Acquisitions on Shareholder Wealth: Event Study for Latin American Airlines

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  • Lina M. Cortés
  • John J. García
  • David Agudelo

Abstract

This study analyzes the effectof changes in corporate controlon the way shareholdersbenefit from the announcements of selling and buying airlines, thus contributing to the literature on mergers and acquisitions (M&As) in emerging markets. Using a methodologyof event study, including GARCH and OLS models, we find evidence that some selling companies obtain abnormal returns that are statisticallysignificant after the announcement of the M&A. However, when the merger is not strategic, the companies present statisticallysignificant negative abnormal returns. The resultsare not conclusive when analyzing the effecton the valueof the buying companies.

Suggested Citation

  • Lina M. Cortés & John J. García & David Agudelo, 2015. "Effects of Mergers and Acquisitions on Shareholder Wealth: Event Study for Latin American Airlines," Documentos de Trabajo de Valor Público 12453, Universidad EAFIT.
  • Handle: RePEc:col:000122:012453
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    Cited by:

    1. Kiesel, Florian & Ries, Jörg M. & Tielmann, Artur, 2017. "Reprint of “The impact of mergers and acquisitions on shareholders' wealth in the logistics service industry”," International Journal of Production Economics, Elsevier, vol. 194(C), pages 261-277.
    2. Carlos Castro-Iragorri, 2019. "Does the market model provide a good counterfactual for event studies in finance?," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 33(1), pages 71-91, March.
    3. Kiesel, Florian & Ries, Jörg M. & Tielmann, Artur, 2017. "The impact of mergers and acquisitions on shareholders' wealth in the logistics service industry," International Journal of Production Economics, Elsevier, vol. 193(C), pages 781-797.

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    More about this item

    Keywords

    Mergers and acquisitions; Event study; Airlines; Latin America;
    All these keywords.

    JEL classification:

    • 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
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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