Document Type

Article

Version Deposited

Published Version

Publication Date

4-2014

Publication Title

The International Journal of Business and Finance Research

Abstract

Market reaction to mergers and acquisitions is a popular research topic in finance. It has been well documented in empirical literature that target companies earn significant abnormal market returns in corporate acquisitions. However, the effects of stock market crashes, and the effects of whether the acquirer is a domestic firm or a foreign firm, on target firm abnormal returns have not been studied sufficiently. In this paper, we make a contribution to the extant literature on these subjects by studying the abnormal market returns earned by U.S. target firms acquired by domestic and foreign firms after the 2008 stock market crash. Our test results indicate that U.S. targets that were acquired by other U.S. firms earned significantly higher abnormal returns, compared with targets acquired by foreign firms, after the crash. We also find that the target companies earned greater abnormal returns in non-friendly acquisitions than in friendly acquisitions during this period.

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With this email, we grant Campbell Library, Rowan University permission to permanently add articles published by its faculty members in any of the Institute for Business and Finance Research journals to institutional repository, Rowan Digital Works, only and for non-profit use only. Deposit of such work must occur after publication with full citation.

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