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Thesis_Michael_Molchan.pdf (802.85 KB)

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Growth Opportunities and Extreme Market Reactions to Mergers and Acquisitions: Do Growth Targets Generate Extreme Announcement Day Returns?

Molchan, Michael E
http://orcid.org/0000-0002-5302-9400
http://rave.ohiolink.edu/etdc/view?acc_num=miami1618924024777613

Abstract Details

2021, Master of Arts, Miami University, Economics.
This thesis examines the link between a target firm's growth opportunities and the likelihood of an extreme stock market reaction to merger and acquisition (M&A) announcements. While there is utility in observing the average cumulative abnormal return to shareholders, not all firms involved in a M&A transaction can expect to receive the average return. Instead, many firms receive extremely positive or extremely negative announcement day returns. Cumulative abnormal returns (CARs) are estimated for 812 target firms and 571 acquirer firms with announcement dates between January 1, 2009 and December 31, 2019. The growth opportunities of the corresponding target firms are approximated using the KBM model and the target firm's market-to-book ratio. This paper finds mixed evidence that growth opportunities drive extreme announcement day returns for target as well as bidder shareholders. Ultimately, the relationship between target growth potential and extreme announcement day returns is uncertain and worthy of further investigation.
Tyler Henry (Advisor)
Thomas Boulton (Committee Member)
Jonathan Wolff (Committee Member)
46 p.
Economics; Finance
growth opportunities; extreme market reactions; PVGO

Recommended Citations

Citations

  • Molchan, M. E. (2021). Growth Opportunities and Extreme Market Reactions to Mergers and Acquisitions: Do Growth Targets Generate Extreme Announcement Day Returns? [Master's thesis, Miami University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=miami1618924024777613

    APA Style (7th edition)

  • Molchan, Michael. Growth Opportunities and Extreme Market Reactions to Mergers and Acquisitions: Do Growth Targets Generate Extreme Announcement Day Returns? 2021. Miami University, Master's thesis. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=miami1618924024777613.

    MLA Style (8th edition)

  • Molchan, Michael. "Growth Opportunities and Extreme Market Reactions to Mergers and Acquisitions: Do Growth Targets Generate Extreme Announcement Day Returns?" Master's thesis, Miami University, 2021. http://rave.ohiolink.edu/etdc/view?acc_num=miami1618924024777613

    Chicago Manual of Style (17th edition)

miami1618924024777613
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© 2021, all rights reserved.
This open access ETD is published by Miami University and OhioLINK.