A Comparative Abnormal Return Analysis of Mergers and Acquisitions in the Emerging Markets

Irem Sevindik and Fazil Gokgoz

A chapter in Financial Management from an Emerging Market Perspective from IntechOpen

Abstract: Financial crisis originated in developed countries in 2008 and has affected M&A activities worldwide. This impact may have irreversible results in emerging market economies. This study aims to examine the spillover effects of 2008 economic crisis, started in developed countries, in emerging markets. In this manner, we have analyzed M&A activities from the acquirer firms' side in BRICS-T countries (namely, Brazil, Russia, India, China, South Africa, and Turkey) for banking industries in pre-and postcrisis periods so that effects of economic crisis can be captured. Significant transactions over $100 million are included in the analysis. Event study methodology, which uses daily market index returns, daily stock returns, and M&A announcement dates to calculate abnormal returns, is employed for the analysis. The cumulative abnormal returns (CARs) are calculated for September 2003-November 2008 (precrisis period) and November 2008-December 2013 (postcrisis) periods. In conclusion there are negative mean CARs in Brazil, India, and Russia, while there are positive mean CARs in China, South Africa, and Turkey in precrisis period. In addition, there are negative mean CARs in South Africa, Brazil, and China, while there are positive mean CARs in Russia, Turkey, and India in postcrisis period.

Keywords: mergers and acquisitions; abnormal return analysis; financial crisis; BRICS; Turkey (search for similar items in EconPapers)
JEL-codes: C88 E47 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ito:pchaps:120682

DOI: 10.5772/intechopen.71821

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