An explanation of factors related to the acquiring firm’s abnormal returns from M&A activities

Abstract

This paper firstly estimates the abnormal returns from merger and acquisition activities. To obtain the abnormal returns, I used the S&P500, which is considered as market return, and firm returns to calculate the normal returns. The excess returns can be regarded as abnormal returns. Secondly, I performed a regression analysis to test the relationship between abnormal returns and explanatory factors. This paper examines these relationships and provides suggestions to companies which would participate in merger and acquisition activities.