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Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Anna Stepanova
The Reaction of the US Stock Market to the Announcement of M&A
World Economy
(Bachelor’s programme)
2017
Nowadays M&A deals have become one of the most popular ways of business reorganization. The study of the US M&A market as a world leader in the number and volume of transaction is of great interest. And more precisely, the US banking sector as it differs from other sectors of the economy in many issues.

Historically, an introduction of new regulatory reforms has been one of the main reasons of new M&A waves in the banking industry. However, the new US administration with D. Trump intends to make significant amendments to the banking law.

The aim of this study is to analyze the regulatory aspects of M&A deals in the banking sector, and to investigate the reaction of stock market on information events – announcements of M&A deals. To achieve the purpose several immediate objectives have been formulated: to define the concept of “merger” and “acquisition”, their motives and risks; to describe historical and modern trends in this area; to examine characteristics of transactions in banking sector and its regulatory acts as well as the points of D. Trump’s electoral campaign and its possible effect on the M&A market; to evaluate the abnormal returns and cumulative abnormal returns of bidder companies involved in M&A, along with the significance of changes in yield for the dynamics of the stock market.

The highest average cumulative return appears to correspond to a shorter time window. This result might be explained by the fact that the market quickly reacts to the announcement of M&A and normalizes in the future. The added wealth for the bidder companies is created not in all cases, so there is a possibility of losses for investors. However, the uniqueness of each transection as well as the fact of other information events and insider information on the market indicates a possible change in this results in the long-term period.

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