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The Impact of Acquisitions Deals Announcement According to Financing Decisions on Value of Listed Acquiring Companies at Egyptian Stock Exchange

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  • Ahmed A.Elhakeem
  • Khairy Elgiziry

Abstract

This study investigated the impact of short and long term acquisition deals announcement according to financing decisions on value of listed acquiring companies at Egyptian Stock Exchange. Short-term and long-term study methodology was applied to analyze average abnormal returns and cumulative average abnormal returns for a sample of acquiring companies held in the Egyptian stock exchange. Long-term event study methodology is applied according to annually buy-hold abnormal return method (ABHAR). Average abnormal returns and cumulative average abnormal returns were calculated to evaluate the acquirer's return for a sample of 31 acquiring companies listed and traded at Egyptian stock exchange during the period 2005-2014. The Sample is selected from 212 acquiring companies which completed the acquisition during the period. Paired T-test, Mann Whitney and ETA measurements were used to determine whether there was significant difference between the means in pre/post events. The results indicate that acquisitions did not generate cumulative average abnormal returns (CAAR) during the event window of 40 days (-20,+20) for the entire sample, but the acquisitions generated 26.67% (statistically significant) cumulative average abnormal returns during long-term event period. The Positive abnormal returns were not observed in the case of acquisitions financed with cash, stock or mix during the 40 days event window (short-term), but on long-term where the acquisitions were financed with cash and stock positive abnormal returns are generated and were not observed in the case of acquisitions financed with mix method.

Suggested Citation

  • Ahmed A.Elhakeem & Khairy Elgiziry, 2016. "The Impact of Acquisitions Deals Announcement According to Financing Decisions on Value of Listed Acquiring Companies at Egyptian Stock Exchange," Accounting and Finance Research, Sciedu Press, vol. 5(4), pages 115-115, November.
  • Handle: RePEc:jfr:afr111:v:5:y:2016:i:4:p:115
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    References listed on IDEAS

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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