The Stock Market Reaction to Mergers and Acquisitions: Evidence from the Banking Industry

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dc.contributor.authorLozada, Juan M
dc.contributor.authorCortés, Lina M.
dc.contributor.authorVelasquez Gaviria, Daniel
dc.contributor.eafitauthorjmlozadah@eafit.edu.co.
dc.contributor.eafitauthorlcortesd@eafit.edu.co
dc.contributor.eafitauthordanielvelasquez@itm.edu.co
dc.coverage.spatialMedellín de: Lat: 06 15 00 N degrees minutes Lat: 6.2500 decimal degrees Long: 075 36 00 W degrees minutes Long: -75.6000 decimal degreeseng
dc.date.accessioned2020-02-27T15:59:26Z
dc.date.available2020-02-27T15:59:26Z
dc.date.issued2020-02-19
dc.description.abstractMergers and acquisitions (M&As) are mainly a mechanism used in the Latin American banking industry to carry out business consolidation. This paper focuses on the effect of M&A announcements on stocks of Latin American banks and their rivals between 2000 and 2019. We evaluate two impacts of M&A announcements: impacts on cumulative abnormal returns (CAR) and impacts on event-induced variance (EIV). We use the GARCH-based event-study method. We find that acquirers and target banks have a statistically significant CAR, however, the sign is inconclusive. Rivals of acquirers and targets are not affected by M&A announcements. In general, we observe that EIV is negative for acquirers, targets, and rivals. Finally, we estimate a multivariate GARCH model to isolate the effects of co-movements of volatility between the acquirer and the target, and we find that the results remain qualitatively equal.eng
dc.identifier.jelC32
dc.identifier.jelG14
dc.identifier.jelG21
dc.identifier.jelG34
dc.identifier.urihttp://hdl.handle.net/10784/15887
dc.language.isospaeng
dc.publisherUniversidad EAFITspa
dc.publisher.departmentEscuela de Economía y Finanzasspa
dc.rights.accessrightsinfo:eu-repo/semantics/openAccesseng
dc.rights.localAcceso abiertospa
dc.subject.keywordEmerging Marketsspa
dc.subject.keywordGARCH event studyspa
dc.subject.keywordLatin Americaspa
dc.subject.keywordBanking industryspa
dc.titleThe Stock Market Reaction to Mergers and Acquisitions: Evidence from the Banking Industryeng
dc.typeworkingPapereng
dc.typeinfo:eu-repo/semantics/workingPapereng
dc.type.hasVersiondrafteng
dc.type.localDocumento de trabajo de investigaciónspa

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