Abnormal Returns in Corporate Action: The case of Indonesia and Taiwan

DOI

10.2991/aebmr.k.200812.005How to use a DOI?

Keywords

G14, G15, G34

Abstract

The rapid numbers of corporate action which is known as mergers and acquisitions (M&A) in Asian market for the past three decades is growing tremendously. The two actions are widely used as a means to pursue strategic targets – for example to maintain stable growth and to gain strong power to control the market. This study investigates abnormal return to shareholders of bidder firms around the announcement day for Indonesia and Taiwan. Using a sample of 160 corporate action M&A, the study found that the stock market responses positively to the two corporate actions. The evidence shows that there are expected cumulative abnormal returns in two different event windows: a two-day window and a three-day window. Investor is found in favour of M&A information. However, non-financial sector is experiencing higher abnormal return compares to the financial sector. The study suggests that the market is trying to reap the maximum benefits from M&A announcement and justify the strategy as an optimistic way to deal with any dynamic changes in the industry. The market has been identified as having its semi-strong form in which every information is well-reflected at the equilibrium price. Henceforth, non-organic growth strategy may be highly recommended to Indonesia and Taiwan managers especially to those who are coming from non-financial sectors.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Aries Heru Prasetyo
PY  - 2020
DA  - 2020/08/13
TI  - Abnormal Returns in Corporate Action: The case of Indonesia and Taiwan
BT  - Proceedings of the 3rd Asia Pacific Management Research Conference (APMRC 2019)
PB  - Atlantis Press
SP  - 23
EP  - 26
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.200812.005
DO  - 10.2991/aebmr.k.200812.005
ID  - Prasetyo2020
ER  -