Testing Hubris Hypothesis for Mergers in Pakistan: Using Event Study Technique

M Fahad Siddiqui () and Shah Wali Khan
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M Fahad Siddiqui: Institute of Management Sciences, Peshawar
Shah Wali Khan: Institute of Management Sciences, Peshawar

Business & Economic Review, 2013, vol. 5, issue 2, 89-105

Abstract: Hubris Hypothesis for mergers (Roll, 1986) is the benchmark for testing the effect of merger on the value of the firm. In this study, the Hubris Hypothesis has been tested for mergers in Pakistan by using the event study technique (MacKinlay, 1997). 42 events of mergers in Pakistani Stock Market during the period 2000-2012 have been considered for study purpose. The study concludes that the Average Abnormal Returns (AAR) tend to be positive in pre-merger period and negative in post-merger period but the Hubris Hypothesis does not sustain as true for mergers in Pakistan.

Keywords: Hypothesis; mergers; average abnormal returns; event study (search for similar items in EconPapers)
JEL-codes: G10 G21 G32 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:bec:imsber:v:5:y:2013:i:2:p:89-105

DOI: 10.22547/BER/5.2.7

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