Mergers and Acquisitions in Brazilian Higher Education Companies (original) (raw)
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Mergers and Acquisitions in Brazilian Higher Education Companies: Effect on Share Value
Finance & Economics Review, 2021
Purpose: The objective of this study is to detect and measure the occurrence of extraordinary returns to the shareholders of private higher education companies, listed on the Brazilian stock market, B3, when mergers and acquisitions occur. Methods: This study uses the Event Study technique on process data from 46 merger and acquisition events, that occurred in the period of 2007-2015, involving the three main Brazilian private higher education companies, and applies the Z-statistic to test the accumulated standard abnormal returns. Results: Based on the results, it is possible to affirm that the presence of abnormal returns was not detected after merger and acquisition events. Events of this nature do not promote changes in the short-term value of the company, in the cases of large and publicly traded Brazilian private higher education companies. Implications: The announcement of a merger or acquisition process has wide repercussions in the media and attracts the attention of investors that aims to gain abnormal earnings from anticipated post-merger value creation. This study showed that the potential gain in value does not always occur or is reflected in the stock prices of the companies involved, in the short term.
Impact of Merger Announcements on the Stock Returns of Brazilian Acquiring Firms
Estudos Econômicos (São Paulo)
This paper assesses the impact of merger announcements on the market value of Brazilian acquiring firms based on 31 transactions that took place from 2004 to 2019 and in which the market value of the target was at least 10% of the market value of the acquirer. The estimates from the BEKK model, which extends the market model to incorporate time-varying betas and volatility clustering, suggest that abnormal returns to acquirers’ stockholders over a 15-day window around the merger announcement are statistically and economically significant, amounting to 5.3584%. Financial and accounting indicators of acquirers prior to and after the merger do not rule out the possibility that these short-run returns reflect misassessment of market participants of the value created by mergers.
Review of Business Management, 2015
Objective-Analyze the reactions of the stock market to M&A announcements, i.e. find out if there was value creation and consequently maximization of shareholder wealth or whether there was value destruction and consequently a decrease in the wealth of the shareholders of the acquiring companies in the short term. Design/methodology/approach-Event study-Quantitative Method Findings-It can neither be affirmed that the acquisitions had a significant impact on value creation for purchasers and banks, nor can it be denied. Given the lack of preponderance of either positive or negative returns, the transactions may have been perceived in different manners. Practical implications-The results may be explained by the fact that the synergies that resulted from the M&A processes in the banking sector only helped consolidating major market players and consequently reduced competitiveness in that sector. The negative abnormal returns of M &A processes are due to the monopolistic market competition structure (Tabak, Fazio & Cajueiro, 2012).
Effects of Mergers and Acquisitions on Shareholder Wealth: Event Study for Latin American Airlines
2015
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.
Stock Market Reaction to Mergers and Acquisitions Announcements: The Case of ZSE
Undegraduate Dissertation
The research empirically examines the stock market’s reaction to M&A announcements on the Zimbabwe Stock Exchange (ZSE) over the period, 2009 to 2017. The research consist of fourdifferent types of M&A namely horizontal, conglomerate, cross border and an acquisition of anon-listed entity. Basing on the Efficient Market Hypothesis (EMH), the study used the widelyadopted Event Study Methodology (EVM) to determine the existence of abnormal returns (AR)and cumulative abnormal returns (CAR) following M&A announcements hence assessed the semi-strong form efficiency of the local bourse on such news. t-Tests were run at 95%confidence level to determine the significance of abnormal and cumulative abnormal returns.The empirical results show that significant AR and CAR have been negative for acquiring firmsand positive for target firms conforming to general market reactions to M&A announcementsas presented by past studies. The irregular AR and CAR patterns across counters suggest thatinvestors do not quickly react to M&A news possibly inferring a weak form efficiency of the ZSE. There appears to be share price reactions days leading to the announcement, confirmedwith significant pre-announcement period CAR, this suggests that there are informationleakages prior to public announcement. Based on these results, it can be concluded that thelocal stock market significantly reacts to M&A announcements and that the ZSE exhibits aweak form efficient on M&A announcements.
M&A Announcements and Their Effect on Return to Shareholders: An Event Study
Accounting and Finance Research, 2014
This study examines a sample of M&A announcements in the Asia-Pacific region during the time period of May 2013-September 2013 to identify the post-facto effect of M&A announcements on the stock prices of the target and the bidding firms. The study has used the event study methodology where the Cumulative Average Abnormal Returns (CAAR) of the target and bidder firm's stock prices in different event windows have been analyzed. A paired sample analysis has also been conducted by comparing the pre-announcement and post-announcement returns of the target and bidder firms' stock prices in the event window of ±2 days. Across all the event windows, target firm's stock price yields positive CAAR that is significantly different from zero. Unlike the target firms, bidder firms do not show statistically significant CAAR across all the event windows. The target firms depict that the post announcement returns are significantly greater than the pre-announcement returns, indicative of the immediate market reaction to the information disclosure.
2011
This paper presents empirical evidence about the ability of event studies to capture mergers' ex-post profitability as measured by accounting data. We use a sample of large horizontal concentrations during the period 1990-2002 involving 482 firms either as merging firms or competitors, and contrast a measure of the mergers' profitability based on stock market event studies with one based on balance sheet profit data. We show that using a long window around the announcement date (25 or 50 days before the event) increases the ability to capture the ex-post merger effect: the pairwise correlation coefficient is positive and highly significant.
Corporate Finance: Governance, 2019
This paper presents an investigation into the relationship between the announcement of mergers and acquisition and the existence of positive abnormal returns for shares of these firms. The aim of this project is to examine the impact of Merger and Acquisition on the stock prices of Indian Banks by using the Event Study Methodology; it is one of the most frequently used tools in financial research. The objective of Event Study is to assess whether there are any abnormal or excess returns earned by security holders accompanying specific events (e.g. merger announcements, earnings announcements, stock splits), where an abnormal return is the difference between observed return and appropriate return by stock market during a particularly defined event window.<br><br>In order to analyse the effect of announcement of bank’s Merger and Acquisition on stock price, we have considered four cases of Mergers in banking sector. In this study, we tested our results by analysing the dai...
Using the event study methodology introduced by for six Greek industrial and construction firms, we attempt to measure the abnormal returns on stock prices on the day of the acquisition announcement. Estimation period and event period in our market model is -211 -11 -10, +10 respectively. In order to allow for asymmetric effect of news on the abnormal returns we use an E-GARCH model for period -211,-1. Empirical results show that on day t=0, AAR go slightly positive, while CAAR remain positive (0.4% and 1.3% respectively). E-GARCH model results show that good news have a positive effect on abnormal returns, while bad news a marginal negative one.
2014
In various studies, impact of merger/acquisition (M&A) announcements on stock prices is pronounced by various researchers. Event study has been conducted in this paper on merger/acquisition announcements. In this study, data span of 2006-10 has been covered. Impact of merger/acquisition announcement on stock prices of event firm (acquirer) has been analyzed. It has been found that merger/acquisition announcement depicts positive as well as negative impact on share price of the companies before and after the time of announcements of merger/acquisition. In this, study no significant t value is observed. Through graphs, one year stock price movement after the event window date is also critically analyzed by the researcher. It is found that in all cases except Thal Limited, Allied Bank Limited, Exide Pakistan Ltd, decline in the share price of the companies has been studied.