Market Reaction at the Announcements on Hostile Takeovers: Russian and European Markets

Abstract

 Natalia Nikolaevna Maricheva - National Research Institute "Higher School of Economics".

E-mail: nnmaricheva@edu.hse.ru

Elena Moiseevna Rogova - National Research Institute "Higher School of Economics".

E-mail: erogova@hse.ru

The paper represents the results of empirical testing of market reaction at the announcements on takeovers at Russian and European financial markets. It contains an attempt to reveal the differences in market reactions between both friendly acquisitions and hostile takeovers, and European and Russian markets. On the base of the study, the authors conclude that the difference in the reaction at the information on friendly acquisitions and hostile takeovers is significantly valuable for all the markets. The information on hostile takeovers causes the negative reaction elsewhere, but its impact at the Russian market is stronger than the European ones. In addition, the authors examine the features of the deals and the acquiring companies, and their relationship with the cumulative abnormal returns caused by acquisitions.

The study is performed by event studies and regression analysis. The sample consists of 220 announcements of 93 public companies from Russia and 6 European countries from different sectors of economy for the period of 2006–2015.