Is the event study methodology useful for merger analysis? A comparison of stock market and accounting data

Tomaso Duso, Klaus Gugler () and Burcin Yurtoglu

International Review of Law and Economics, 2010, vol. 30, issue 2, 186-192

Abstract: This paper presents empirical evidence about the ability of event studies to capture mergers' ex-post profitability as measured by accounting data. We use a sample of large horizontal concentrations during the period 1990-2002 involving 482 firms either as merging firms or competitors, and contrast a measure of the mergers' profitability based on stock market event studies with one based on balance sheet profit data. We show that using a long window around the announcement date (25 or 50 days before the event) increases the ability to capture the ex-post merger effect: the pairwise correlation coefficient is positive and highly significant.

Keywords: Mergers; Merger; control; Event; studies; Ex-post; evaluation (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:30:y:2010:i:2:p:186-192

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