The Impact of Acquisition on Stock Value in Case of Warsaw Stock Exchange

Kaczmarczyk Wojciech ()
Additional contact information
Kaczmarczyk Wojciech: University of Economics in Katowice, 1 Maja street 50, 40-287Katowice, Poland

Economics and Culture, 2019, vol. 16, issue 1, 70-79

Abstract: Research purpose: Seven of 10 companies that have won the Polish Forbes edition Merge & Acquisition 2018 Ranking are listed on Warsaw Stock Exchange. The aim of the conducted research was to test if the biggest acquisitions have an impact on stocks value and is it possible for typical investor to create extra profit by using knowledge of acquisition based on public information.Design/Methodology/Approach: Using data from Warsaw Stock Exchange (quotations), typical measures such as rate of return, standard deviation (risk), correlation and transaction volume changes were calculated. Each of the case results obtained for the company was compared with the result for stock market indexes: WIG (Warszawski Indeks Giełdowy – main WSE index), WIG20 (WSE sub-index of the 20 largest companies), mWIG40 (WSE sub-index of 40 medium companies) and sWIG80 (WSE sub-index of 80 small companies). In addition, the outcomes were confronted with public news (from WSE Electronic System for Information Transfer).Findings: Conducted research has shown that generally successful finalisation of acquisition results in changes of stock prices behaviour. Unfortunately, observed reactions were not the same. Acquisitions induced both increases and decreases in stock prices; there was also no rule in case of risk change. Generally, acquisitions and merges had rather good influence in banking sector (which is still concentrating), but there was no common reaction in other sectors.Originality/Value/Practical Implications: The results will be useful for investors acting on Warsaw Stock Exchange, especially for individual investor who are not able to carry out detailed analyses. The research provides results including possible pre-effects and after-effects of making big acquisition by a large company. The negative market reactions were also shown.

Keywords: Stock; Acquisition; Investments (search for similar items in EconPapers)
JEL-codes: G11 G12 G34 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/jec-2019-0008 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecocul:v:16:y:2019:i:1:p:70-79:n:8

DOI: 10.2478/jec-2019-0008

Access Statistics for this article

Economics and Culture is currently edited by Velga Vēvere

More articles in Economics and Culture from Sciendo
Bibliographic data for series maintained by Peter Golla ().