Impact of Merger and Acquisitions on the Dynamics of the US Stock Market in the Technology Industry

The final qualification paper is devoted to the analysis of the impact of M&A transactions in the technology industry on the dynamics of the US stock market using the event analysis method for the period from 2013 to 2020. A sample of 300 M&A transactions of the US technology sector was used for analysis purposes. As part of the analysis, a market model was selected to calculate the expected return. Event analysis was performed on an event window of 40 trading days around the date of the event (the announcement of the transaction). The estimation window was 120 trading days before the event window. The results of the study showed negative CAR values during the entire event window. AR values varied greatly from positive to negative, which characterized the lack of a unified market reaction to events. A negative CAAR indicates a general negative market reaction to M&A, although statistically insignificant. Significant deviations of the CAR on the 14th, 9th and 4th day before the announcement of the deals indicated that the information about the deals was known to investors before their announcement. The overall conclusion of the study is the weak impact of the announcement of M&A deals in the technology industry in the US market for the period from 2013 to 2020 on the Dow Jones U.S. Technology Index. However, considering the spread of AAR and beta values from positive to negative, it can be assumed that the impact of M&A transactions on the market dynamics is underestimated. The paper also assessed the impact on the cumulative abnormal return of such factors as: the geographical location of the acquirer and target, the similarity of the acquirer's and target's industries, the ratio of the transaction size to the market capitalization of the acquiring company, ROA and ROE indicators of acquirers before the transaction, the acquirer's experience in the M&A market, and the impact of the crisis on the effectiveness of transactions. It was not possible to assess the impact of these variables on CAR due to the low statistical significance of the coefficient values, however, based on the signs before the coefficients of the regression and correlation variables, we were able to draw conclusions about the positive impact of the variables ROA, ROE, transaction size to the market capitalization of the acquiring company, the presence of a crisis and the negative impact of variables reflecting geographical location, similarity of industries and experience of the acquiring company on CAR.