الفهرس | Only 14 pages are availabe for public view |
Abstract The present study aims to examine stock returns of target companies surrounding acquisition announcement by using event study. The sample consists of 49 acquisition announcements for 44 Egyptian target companies from year 2005 to 2016. Like European and US companies, acquisition announcements found to have a significant and positive effect on stocks returns of Egyptian companies. In addition, the study seeks to determine if there is abnormal return created to shareholders prior to public acquisition announcements on the short run. The study confirms positive abnormal return created to shareholders before public acquisition announcement like developed markets. This means that information leakage has taken place which includes the disclosure of some private information to a specific group of investors (insider traders). Finally, the study investigates the determinants that could predict targets in the Egyptian stock market by using logit regression. The sample includes 78 companies, which consists of two sub samples, 39 targets and 39 non-targets. The study findings support the firm liquidity and price-earnings hypotheses as motives to acquire companies. The study finds positive and significant relationship between firm liquidity and the acquisition probability. Also, price-earnings ratio is negatively and significantly associated with acquisition probability. On the other hand, the study rejects firm size, inefficient management, financial leverage, firm undervaluation hypotheses. |