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Bid premiums and cumulative abnormal returns: An empirical investigation on the consequences of the Covid-19 pandemic

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  • Magnanelli, Barbara Sveva
  • Nasta, Luigi
  • Ramazio, Emanuele

Abstract

Economic conditions within the market affect the likelihood of performing a business combination between firms. Indeed, the level of uncertainty during period of crisis plays a relevant role in M&A transactions. This paper is one of the first attempts to investigate the relationship between health crisis and business combinations. The findings show that while the bid premiums computed using the target’s share price thirty days before the transaction announcement increase for M&A operations performed during health crises, the cumulative abnormal returns decrease.

Suggested Citation

  • Magnanelli, Barbara Sveva & Nasta, Luigi & Ramazio, Emanuele, 2022. "Bid premiums and cumulative abnormal returns: An empirical investigation on the consequences of the Covid-19 pandemic," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s154461232200318x
    DOI: 10.1016/j.frl.2022.103093
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    References listed on IDEAS

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