Evaluation of Effectiveness of Mergers and Acquisitions in the Oil Industry

Mergers and acquisitions are a widespread way of development for companies. The state of this market in the oil industry after the global financial crisis is unstable. The ability of oil companies to "lower for longer" and the need to look for oil reserves in the face of the complexities of geological exploration of new fields make this research relevant, including in Russia. To assess the effectiveness of recent transactions, one of the most common methods, event study, was chosen. It is the accumulation of accumulated excess return - the difference between the real and projected stock price values ​​- for companies during the event window. The analysis showed that the CAAR, the average accumulated excess return, is -0.215% for the sample. This indicator is not much different from zero and is insignificant, which shows that there is no negative impact of M & A transactions on companies' performance. As demonstrated by the results of the regression analysis, the price of Brent crude negatively affects the efficiency of the merger and acquisition transaction. Consequently, periods of high and low oil prices could nullify the overall impact of transactions on the behavior of company shares. In addition to crude oil prices, the ratio of the size of the deal to the capitalization of the buyer company has a negative impact on the effectiveness of M & A transactions.