European Business Schools Librarian's Group
IESE Research Papers,
IESE Business School
No D/689: The reaction by industry insiders to M&As in the European financial industry
Jose M. Campa () and Ignacio Hernando
Additional contact information
Jose M. Campa: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Ignacio Hernando: Bank of Spain
Abstract: This paper looks at the reaction by industry insiders, industry analysts and competing firms to the announcement of M&As that took place in the European Union financial industry in the period 1998-2006. Analysts covering firms involved in an M&A transaction do not significantly alter their recommendation. This is consistent with the hypothesis that the transaction on average is "fairly priced" and that stock market prices reflect all relevant information on the assets. We also find that the correlation between excess returns for merging and competing firms is positive and, in some cases, significantly higher for domestic mergers than for international deals. This is consistent with the idea that domestic deals are more likely to have a negative impact on industry competition.
Keywords: Mergers and acquisitions; analysts recommendations; rival firms
23 pages, April 7, 2007
Full text files
DI-0689-E.pdf
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