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A Comparative Abnormal Return Analysis of Mergers and Acquisitions in the Emerging Markets

In: Financial Management from an Emerging Market Perspective

Author

Listed:
  • Irem Sevindik
  • Fazil Gokgoz

Abstract

Financial crisis originated in developed countries in 2008 and has affected M&A activities worldwide. This impact may have irreversible results in emerging market economies. This study aims to examine the spillover effects of 2008 economic crisis, started in developed countries, in emerging markets. In this manner, we have analyzed M&A activities from the acquirer firms' side in BRICS-T countries (namely, Brazil, Russia, India, China, South Africa, and Turkey) for banking industries in pre-and postcrisis periods so that effects of economic crisis can be captured. Significant transactions over $100 million are included in the analysis. Event study methodology, which uses daily market index returns, daily stock returns, and M&A announcement dates to calculate abnormal returns, is employed for the analysis. The cumulative abnormal returns (CARs) are calculated for September 2003-November 2008 (precrisis period) and November 2008-December 2013 (postcrisis) periods. In conclusion there are negative mean CARs in Brazil, India, and Russia, while there are positive mean CARs in China, South Africa, and Turkey in precrisis period. In addition, there are negative mean CARs in South Africa, Brazil, and China, while there are positive mean CARs in Russia, Turkey, and India in postcrisis period.

Suggested Citation

  • Irem Sevindik & Fazil Gokgoz, 2018. "A Comparative Abnormal Return Analysis of Mergers and Acquisitions in the Emerging Markets," Chapters, in: Soner Gokten & Guray Kucukkocaoglu (ed.), Financial Management from an Emerging Market Perspective, IntechOpen.
    • Handle: RePEc:ito:pchaps:120682
    DOI: 10.5772/intechopen.71821
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    More about this item

    Keywords

    mergers and acquisitions; abnormal return analysis; financial crisis; BRICS; Turkey;
    All these keywords.

    JEL classification:

    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications

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