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National Research University Higher School of EconomicsStudent ThesesEvaluation of M&A deal announcement influence on the market quotes of participating in the deal companies on the example of IT-industry

Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Vladislav Kazakov
Evaluation of M&A deal announcement influence on the market quotes of participating in the deal companies on the example of IT-industry
Faculty of Economics
Bachelor’s programme
9
2014
Bachelor's graduate paper which calls ‘Evaluation of M&A deal announcement influence on the market quotes of participating in the deal companies on the example of IT-industry" contains 4 figures and 6 tables. Scope of the thesis is 47 pages. Bibliography includes 38 sources. Keywords: abnormal return, M&A, public companies, IT-industry, event-study.Methodology of the event study has long been recognized sufficiently precise tool commonly used by domestic and foreign researchers to analyze various corporate events and their impact on the market quotes. In this paper we present a study applied to announcements of mergers/acquisitions for the information technology M&A market. Relevance of the study confirmed by dynamic development of the IT-industry, in particular, is quite high values ​​of the total volume and number of M&A transactions. Application of the event study allows to make a series of precise conclusions, developed in the research model allows investors to predict abnormal returns of the participating in M​&A transactions companies.The goal of this work is to establish the relationship between the abnormal return and method of financing, the deal volume and nature of the deal. Objects of research concentrate on the public companies of IT industry. The subject of the work is the market reaction to the announcement of M&A deals.In reviewing of the literature on selected topics revealed the major work on event-analysis of M&A transactions owned by foreign authors, and in Russian literature it is quite rare to find the research on the subject. Many domestic researchers refer to the absence of the optimization tools for the calculation according to the methodology.Scientific novelty of the work based on the implementation of event-study methodology for the analysis of different event configurations in M&A transactions and on applying it for emerging market IT M&A.Practical significance of the work based on the fact that the main conclusions and recommendations contained in the thesis can be used by management of IT companies during the preparing for announcement of the M&A deal. The model developed in this study can be used by investors to predict the abnormal returns generated as a result of the deal announcement.In the first chapter, a detailed analysis of the literature was provided, considering the expectations the market reaction for the announcement of M&A deals. The chapter also discusses the objectives of research and data collection methodology, a classification of the motives for the transaction M & A is also provided there.In the second chapter, the authors describe the criteria for the data sample, explain the basic methodology for event-study, comparing different specifications of the econometric model. Linear regression model is proposed for predicting of abnormal returns.The third chapter analyzes the results obtained for the sample by regression analysis. This analysis is performed separately for the target companies and buying companies.In conclusion, the limitations of the research and prospects for future research are given. As a result of calculations, it was found that the steady positive dependence of cumulative abnormal returns from the method of financing, deal volume and nature of the deal is observed exclusively for target companies. It was also found that the absorbing company is often experiencing negative excess returns in the implementation of hostile transactions immediately after the announcement of M&A transaction, but not in the day of the announcement.

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