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What Drives Shareholder Reaction and Wealth Effect in Block Trades? Evidence from the Warsaw Stock Exchange

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  • Katarzyna Byrka-Kita
  • Mateusz Czerwiński
  • Agnieszka Preś-Perepeczo

Abstract

The main objective of this article is to present the determinants of shareholder reaction to block trades and their wealth effect on the Warsaw Stock Exchange. The positive abnormal returns obtained for the entire sample indicate that block trades create shareholder value. Shareholders reacted positively to block trades without a control transfer in the Polish market, and their reaction was stronger than in the US market. Abnormal returns of block trades concluded at a discount were twice as high as those for the entire sample. Moreover, cross-border block trades had a negative impact on shareholder value creation, as did financial investors as an acquirer. However, cumulative average abnormal returns (CAARs) were driven up by the relative power of minority shareholders (ocean) prior to the transaction. The absolute size of the block acquired by an investor was also observed to have a positive impact on price rises and abnormal returns.

Suggested Citation

  • Katarzyna Byrka-Kita & Mateusz Czerwiński & Agnieszka Preś-Perepeczo, 2018. "What Drives Shareholder Reaction and Wealth Effect in Block Trades? Evidence from the Warsaw Stock Exchange," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(7), pages 1586-1607, May.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:7:p:1586-1607
    DOI: 10.1080/1540496X.2017.1315333
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    Cited by:

    1. Joanna Adamska-Mieruszewska & Urszula Mrzygłód, 2020. "Foreign listing pricing effects. The case of emerging economies," Bank i Kredyt, Narodowy Bank Polski, vol. 51(4), pages 367-382.
    2. Kaczmarczyk Wojciech, 2019. "The Impact of Acquisition on Stock Value in Case of Warsaw Stock Exchange," Economics and Culture, Sciendo, vol. 16(1), pages 70-79, June.

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