Price Pressure around Mergers and Acquisitions: Evidence from Shanghai A Shares

DOI

10.2991/icedem-17.2017.29How to use a DOI?

Keywords

M&A; Event study; CAAR; Short selling

Abstract

In 2015, China's mergers and acquisitions (M&As) were in the ascendant, accounting for 15% of global M&A transactions and worth more than 734 billion US dollars. Over 100 individual transactions exceeded 1 billion US dollars. Meanwhile, research on M&A performance and value has become a hot topic in both empirical and theoretical fields. At present, studies on M&As primarily focus on performance, influential factors, and integration problems. By contrast, this study begins with the perspective of the announcement effect. In this study, we find negative linkages between cumulative average abnormal returns (CAARs) and short selling amount around M&A announcement dates. Short selling plays a pivotal role in downward price pressure for stock-financed mergers. Further, we find opposite price pressure surrounding merger closings, particularly for the constituent stocks of the Shanghai Composite Index. This may be explained by portfolio rebalancing due to tracking the stock index.

Copyright

© 2017, 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  - Juijung Tsai
AU  - Yangchao Wang
AU  - Yingrong Chen
PY  - 2017/12
DA  - 2017/12
TI  - Price Pressure around Mergers and Acquisitions: Evidence from Shanghai A Shares
BT  - Proceedings of the 2017 International Conference on Economic Development and Education Management (ICEDEM 2017)
PB  - Atlantis Press
SP  - 113
EP  - 116
SN  - 2352-5398
UR  - https://doi.org/10.2991/icedem-17.2017.29
DO  - 10.2991/icedem-17.2017.29
ID  - Tsai2017/12
ER  -