An empirical study of largest FDI acquisition in the technology sector: evidence from deal of Jio and Facebook

Isha Gupta, T.V. Raman and Naliniprava Tripathy

International Journal of Economic Policy in Emerging Economies, 2025, vol. 21, issue 2, 204-221

Abstract: This paper tries to analyse the impact of the acquisition announcement of Jio by Facebook on the volatility of stock returns of Jio Platform Ltd. The study has been divided into three periods, pre-period, post-period, and whole period. The paper used the GARCH (1, 1) model to conclusively analyse the change in volatility after the acquisition of the company and the asymmetric EGARCH model to capture the leverage effect. The study results infer that the coefficient of the ARCH and GARCH model (α + β) becomes 1(0.11 + 0.89) in the post period which implies that volatility is persistent during the period. The leverage effect is evident in the study as the variance coefficient is negative in all periods and statistically significant which implies that every price change responds asymmetrically to the positive and negative news in the market. Thus, it can be concluded that the announcement has a significant favourable influence.

Keywords: mergers and acquisitions; M%A; conglomerate M%A; Facebook-Jio; event study; GARCH (1, 1) model; EGARCH (1, 1) model. (search for similar items in EconPapers)
Date: 2025
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