Publication year: 2010
Source: International Review of Law and Economics, In Press, Accepted Manuscript, Available online 17 February 2010
Tomaso, Duso , Klaus, Gugler , Burcin, Yurtoglu
This paper presents empirical evidence about the ability of event studies to capture mergers’ ex-post profitability as measured by accounting data. We use a sample of large horizontal concentrations during the period 1990-2002 involving 482 firms either as merging firms or competitors, and contrast a measure of the mergers’ profitability based on stock market event studies with one based on balance sheet profit data. We show that using a long window around the announcement date (25 or 50 days before the event) increases the ability to capture the ex-post merger effect: the pairwise correlation coefficient is positive and highly significant.
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