The Effects of Mergers and Acquisitions on the Stock Performance: Evidence from the Brazilian Stock Market

Abstract

The purpose of this article is to investigate the effects of mergers and acquisitions on the stock performance of acquiring companies traded on the Brazilian Stocks (BM&FBovespa). To that end, we evaluated the cumulative abnormal returns in order to measure their performance in the short and long term after the announcement date of the transaction. Three forms of payment for acquisitions are considered in this study: money, stock, and cash and stock. For 709 transactions studied, the results show that the acquisitions in a bull market bring different returns than those in a bear market. In addition, we note that the market behavior as well as the form of payment influences the return on investment of the acquiring company.

Keywords: Mergers; Acquisitions; Return; Stock Market.