Evaluation and wealth effects of merger and acquisition announcements on the US utility industry

Abstract

The purpose of this paper is evaluate the relationship between mergers and acquisitions and the post and pre acquisition performance of some utility firms in the United States. Based on the result of the analysis, we evaluate whether it is good or bad performance for the market reaction. A sample of 50 M&A cases is randomly chosen from Bloomberg for this study. These M&A occurred between January 2010 and August 2013. We employ Cumulative Abnormal Return (CAR) and the Market Model to analyze the sample to determine whether or not M&A can create value for utility industry in the U.S.