Southwest's acquisition of AirTran: an analysis of short-term stock performance

This paper examines the short-term stock performance of Southwest Airlines and AirTran Airways using time series data consisting of daily and cumulative abnormal returns ± 60 trading days around the merger announcement and merger completion dates. The impact of Southwest's announcement to acqui...

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Main Authors: Manuela, Wilfred S, Jr, Rhoades, Dawna L
Format: text
Published: Archīum Ateneo 2013
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Online Access:https://archium.ateneo.edu/leadership-and-strategy-faculty-pubs/4
http://www.inderscience.com/offer.php?id=59840
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spelling ph-ateneo-arc.leadership-and-strategy-faculty-pubs-10032020-06-06T03:00:37Z Southwest's acquisition of AirTran: an analysis of short-term stock performance Manuela, Wilfred S, Jr Rhoades, Dawna L This paper examines the short-term stock performance of Southwest Airlines and AirTran Airways using time series data consisting of daily and cumulative abnormal returns ± 60 trading days around the merger announcement and merger completion dates. The impact of Southwest's announcement to acquire AirTran is positive. The daily abnormal returns of Southwest and AirTran, using the S&P 500 as index, are highly significant on the merger announcement date. The impact of the merger completion is mixed, however. Southwest's share price drifted lower up to the merger date, underperforming the S&P 500, while the share price of AirTran generally drifted higher in a very narrow range. Southwest and AirTran, nevertheless, outperformed the AMEX Airline Index, suggesting that the higher fuel prices at the time of the merger may have influenced investor reaction to the merger, resulting in lower share prices of major airlines. The beta of Southwest improved after the merger announcement and completion of the merger, suggesting shareholder confidence in the merger and in Southwest's financial performance, at least in the short-term. 2013-01-01T08:00:00Z text https://archium.ateneo.edu/leadership-and-strategy-faculty-pubs/4 http://www.inderscience.com/offer.php?id=59840 Leadership and Strategy Faculty Publications Archīum Ateneo Strategic Management Policy
institution Ateneo De Manila University
building Ateneo De Manila University Library
country Philippines
collection archium.Ateneo Institutional Repository
topic Strategic Management Policy
spellingShingle Strategic Management Policy
Manuela, Wilfred S, Jr
Rhoades, Dawna L
Southwest's acquisition of AirTran: an analysis of short-term stock performance
description This paper examines the short-term stock performance of Southwest Airlines and AirTran Airways using time series data consisting of daily and cumulative abnormal returns ± 60 trading days around the merger announcement and merger completion dates. The impact of Southwest's announcement to acquire AirTran is positive. The daily abnormal returns of Southwest and AirTran, using the S&P 500 as index, are highly significant on the merger announcement date. The impact of the merger completion is mixed, however. Southwest's share price drifted lower up to the merger date, underperforming the S&P 500, while the share price of AirTran generally drifted higher in a very narrow range. Southwest and AirTran, nevertheless, outperformed the AMEX Airline Index, suggesting that the higher fuel prices at the time of the merger may have influenced investor reaction to the merger, resulting in lower share prices of major airlines. The beta of Southwest improved after the merger announcement and completion of the merger, suggesting shareholder confidence in the merger and in Southwest's financial performance, at least in the short-term.
format text
author Manuela, Wilfred S, Jr
Rhoades, Dawna L
author_facet Manuela, Wilfred S, Jr
Rhoades, Dawna L
author_sort Manuela, Wilfred S, Jr
title Southwest's acquisition of AirTran: an analysis of short-term stock performance
title_short Southwest's acquisition of AirTran: an analysis of short-term stock performance
title_full Southwest's acquisition of AirTran: an analysis of short-term stock performance
title_fullStr Southwest's acquisition of AirTran: an analysis of short-term stock performance
title_full_unstemmed Southwest's acquisition of AirTran: an analysis of short-term stock performance
title_sort southwest's acquisition of airtran: an analysis of short-term stock performance
publisher Archīum Ateneo
publishDate 2013
url https://archium.ateneo.edu/leadership-and-strategy-faculty-pubs/4
http://www.inderscience.com/offer.php?id=59840
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