Market reactions to Telecom diversification in the smartphone era

Abstract

In this research, we examine abnormal returns from diversifying acquisition announcements in the period 2000-2016 in the telecom industry. The goal of the research is to shed some light on what impact industry conditions might have on market reactions to diversification. We apply event study methodology on acquisition announcements on a sample of telecom operators and S&P Global 100 companies. The research find no evidence supporting higher cumulative abnormal return from diversifying acquisition announcement in the smartphone era compared to the prior period. In addition, we cannot conclude that investors react differently when acquirer is a telecom operator as opposed to the general market.