The Impact of M&A Characteristics on the Acquiring Companies' Value

Abstract

We conduct an event study of acquiring companies' cumulative abnormal returns as a reaction to merger and acquisition (M&A) announcement news. The study is conducted using three { and ve-day event windows for a sample of M&A deals in the Norwe- gian stock market. We study the e ect of the characteristics of the announcement on the wealth of the acquiring company's share- holders, by examining the variation of cumulative abnormal return related to di erent characteristics of the deal, target, and acquiring company. Our ndings suggest that, overall, the acquiring rm's shareholders earn a positive cumulative abnormal return over the de ned event windows. However, we show that several M&A char- acteristics (e.g., day of week, method of payment) hypothesized to impact pricing of deals, are not signi cant predictors of acquirer returns. We therefore question the traditional wisdom of whether these metrics should matter to managers when announcing M&As.