Market reaction to acquisition announcements after the 2008 stock market crash

Market reaction to mergers and acquisitions is a popular research topic in finance. It has been well documented in empirical literature that target companies earn significant abnormal market returns in corporate acquisitions. However, the effects of stock market crashes, and the effects of whether the acquirer is a domestic firm or a foreign firm, on target firm abnormal returns have not been studied sufficiently. In this paper, we make a contribution to the extant literature on these subjects by studying the abnormal market returns earned by U.S. target firms acquired by domestic and foreign firms after the 2008 stock market crash. Our test results indicate that U.S. targets that were acquired by other U.S. firms earned significantly higher abnormal returns, compared with targets acquired by foreign firms, after the crash. We also find that the target companies earned greater abnormal returns in non-friendly acquisitions than in friendly acquisitions during this period

Investor reaction in stock market crashes and post-crash market reversals.

We study investor overreaction using data for five major stock market crashes during the 1987-2008 period. We find some evidence of investor overreaction in all five stock market crashes. The prices of stocks investors bid down more than the average during crashes tend to increase more than the average in post-crash market reversals. In line with CAPM, we find that high beta stocks lose more value in crashes and gain more value in post-crash market reversals relative to low beta stocks. We further find that smaller firms and those with a low market-to-book ratio lose more value in stock market crashes. However, they do not gain more value in post-crash market reversals, implying that investor reaction against these firms in stock market crashes is not an overreaction. In examining industry-specific behavior, our results indicate that investors overbid down the prices of high-tech stocks in the 1997 crash and manufacturing stocks in the 2008 crash relative to other stocks. However, the prices of stocks in these industries increased more than other stocks in the post-crash market reversals, implying investor overreaction for these industries in these stock market crashes

A Comparison of the Financial Characteristics of NAFTA and Latin American Manufacturing Firms

Comparing the financial characteristics of firms in different countries and different regions has been a popular research topic in finance. However, NAFTA and Latin American manufacturing firms have never been compared. In this paper, we undertake such a study with the MANOVA (Multivariate Analysis of Variance) method and with data drawn from the Research Insight/Global Vintage database in October 2015. Our findings indicate that NAFTA manufacturing firms have less liquidity risk, but more financial risk, compared with Latin American Manufacturing firms. NAFTA manufacturing firms have significantly higher returns on equity due to achieving higher returns on assets and using more financial leverage. Latin American manufacturing firms have more efficient inventory management. However, NAFTA manufacturing firms have more efficient accounts receivable management and total assets management

Seasonality in Market Risk

Ilhan Meric is Professor of Finance in the Department of Finance, School of Business Administration at Rider College. Gulser Meric is an Associate Professor of Finance in the Department of Accounting and Finance, School of Business Administration at Rowan College of New Jersey

2007-2009 Bear Market and Corporate Takeovers

This find is registered at Portable Antiquities of the Netherlands with number PAN-0005837

A Comparison of Business Management Characteristics in U.S., German, and Japanese Manufacturing Corporations

Comparing the management characteristics of business firms in different countries has been a popular research topic in business administration. In this paper, we compare the management characteristics of U.S., German, and Japanese manufacturing corporations. The findings of our study can provide valuable insights for corporate managers and global investors. We find that U.S. manufacturing corporations have the lowest liquidity risk (i.e., U.S. manufacturing firms have higher liquidity levels) compared with German and Japanese manufacturing corporations. German manufacturing corporations have the highest bankruptcy risk (i.e., German manufacturing firms have higher liability levels) compared with U.S. and Japanese manufacturing corporations. The average collection period of accounts receivable and the average payment period of accounts payable are significantly shorter in U.S. manufacturing corporations compared with their German and Japanese counterparts. Due to the extensive use of the just-in-time inventory management system in Japanese Keiretsu industry groupings, Japanese manufacturing corporations have higher inventory turnover rates (i.e., Japanese manufacturing corporations carry lower inventory levels) compared with U.S. and German manufacturing corporations. U.S. manufacturing corporations are able to earn higher operating profit margins compared with their German and Japanese counterparts because they are able to charge higher product prices to customers and/or they are able to have lower manufacturing costs. Japanese manufacturing corporations have the lowest annual sales and total assets growth rates compared with U.S. and German manufacturing corporations