The effects of partial acquisitions on stock performance of target firms

Abstract

This study analyzes the returns to target stockholders for partially acquired firms surrounding the acquisition announcements through one year after the announcements. A sample of fifty-three Canadian firms partially acquired by domestic firms from 1993 through 1999 is considered. The examination of the return behaviour found significant positive abnormal returns from event-day t = - 2 through t = + 1. No significant abnormal returns are realized thereafter. The findings imply that the announcements positively affect the surrounding returns. The lack of significant positive abnormal returns thereafter suggests that the announcement does not have a positive impact on the stockholder returns one year later.