n African Review of Economics and Finance - Implication of mergers and acquisitions on stock returns before and during the 2007-2009 credit crunch : an event study

Abstract

Considering the 2007-2009 financial situation, one cannot help but wonder how the crisis affected the wealth associated with merger and acquisition (M&A) announcements. This article examines the impact of such announcements on the stock returns (performance) of public companies during financial and non-financial crisis periods. Specifically, the article seeks to compare the effects these announcements have on the stock returns of bidder firms during a crisis period and a non-crisis period. The financial crisis period considered announcements made between October 2007 and February 2009, while that of the non-financial crisis was between January 1999 and October 2007. Data were collected from Reuters Business Database, Bloomberg Database, Thomson Datastream and other web-based sources. With the use of event study methodology, the study reveals that there are no significant modifications in the stock return of a bidder firm's shares, either during or before a global economic crisis.