An Empirical investigation of the factors affecting the change in stock price among publicly listed corporation in the Philippines from 2006 to 2010

• Main Authors: Dator, Evan P., Sy, Denver S., Tang, Alger C., Yu, Marc Ivan G.
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Stocks > Prices > Philippines; Consolidation and merger of corporations > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14710
• Institution: De La Salle University

The primary motive of all business firms is to create synergy (Booth & Cleary, 2007). In line with this, companies perform comprehensive planning and create effective strategies in order to achieve this goal. One business strategy is to merge with other companies or acquire other businesses. The study explored the effects of mergers and acquisitions, together with liquidity, activity, leverage, profitability and market performance ratios and industry on the change in stock price among all publicly listed companies in the Philippines during the year 2006 to 2010. To accomplish this, the researchers made use of panel data regression with mergers and acquisitions, financial ratios and industry as independent variables and the change in stock price as dependent variables to highlight the relationship and impact of various independent variables on stock price. The results showed that mergers and acquisitions do not affect publicly listed companies’ change in stock price. Nonetheless, certain financial ratios namely current ratio, quick ratio, return on asset, asset turnover, payables turnover, debt to equity ratio, equity ratio, dividend payout ratio, price earnings ratio and some industries like diversified services, education, hotel & leisure, oil and transportation services do exhibit significant impact on companies’ change in stock price. By being able to point out which factors would positively affect stock prices, corporate managers would be able to create more advantageous strategies to increase stock prices. This study showed that business combinations do not have significant impact in the change in stock price. Therefore, management could have other reasons for the occurrence of merger and acquisition.