The reaction by industry insiders to M&As in the European financial industry

Jose Campa and Ignacio Hernando
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Ignacio Hernando: Bank of Spain

No D/689, IESE Research Papers from IESE Business School

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 (search for similar items in EconPapers)
JEL-codes: G20 G34 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2007-04-07
New Economics Papers: this item is included in nep-com and nep-eec
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http://www.iese.edu/research/pdfs/DI-0689-E.pdf (application/pdf)

Related works:
Journal Article: The Reaction by Industry Insiders to M&As in the European Financial Industry (2008)
Working Paper: The reaction by industry insiders to M&As in the European financial industry (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:iesewp:d-0689

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