Finance Dissertation

Abstract

This study empirically analysis the impact in stock price reaction due to merger or acquisition announcement in the target firms. Moreover, for research and investigation purposes this study methodology using the traditional event study. The role of insider information prior to merger and acquisition announcements is also empirically tested and explained to be the reason for the pre-announcement price run-ups observed. Various event windows have been regarded, compare and linked to the timeframe over which the price run-up is started. This analysis suggests an upward rise in average abnormal returns for target firms in the pre-announcement era, which, in fact, signals insider information or expectation. The cumulative average abnormal returns has been calculated for the event window ( -5 , +5 ) .