The effect on stock price and performance among M&A bidder firms listed in Philippine Stock Exchange for the period 2005 to 2011

• Main Author: Carreon, Cecille L.
• Format: text
• Language: English
• Published: Animo Repository 2017
• Subjects: Consolidation and merger of corporations > Philippines; Stocks > Prices > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/5388
• Institution: De La Salle University

A recent study about global merger activity found that there is a cyclical increasing trend from .73 trillion dollars in 1992 to 2.65 trillion dollars in 2010, an average of 2.71 trillion dollars per year global M&A deals (Yilmaz & Tanyeri, 2015). In the Philippines, M&A activity has been noticeable in different industries. Together with Philippines market status and factors that affect bidder firms stock price in a short period around M&A announcement date, this paper argue if M&A is indeed value maximizing. Predominantly, empirical studies regarding impact of M&A to CAR have resulted to target firms shareholders being mostly benefited while result for bidder firms varied. On the other hand, empirical studies regarding impact of M&A to key financial ratios are mixed. This study examined the short and long-term effects of M&A on performance, market and accounting measures-based performance of bidder firms listed in PSE that undergone M&A between year 2005 and 2011. The statistical test for each CAR per day in the event window presents only few significant pre- and post-announcement returns. While for alternative event windows, significant positive returns were observed after 5 to 7 days of M&A and significant negative returns on 1 to 2 days after M&A announcement. The results showed an insignificant increase in leverage and liquidity ratio and insignificant decline in profitability ratios. Only those companies belonging to financial, holding and services were significantly affected in terms of stock price movement. However, only financial companies were significantly affected in terms of current ratio.