The hypothesis of wealth maximization for stockholders during mergers and acquisitions - an empirical analysis of Brazilian stocks after the real plan

Authors

  • Marcos Antônio de Camargos Centro Universitário de Belo Horizonte
  • Francisco Vidal Barbosa UFMG; FACE; CEPEAD; CAD

DOI:

https://doi.org/10.5700/issn.2177-8736.rege.2005.36532

Keywords:

Merger and acquisitions, Shareholder value, Event study, Brazilian capital market, Abnormal return, Stakeholders, Wealth maximization hypothesis

Abstract

The concept of creating wealth for stockholders through stock price increases usually accompanies a merger or acquisition. This ongoing appeal continues to be defended by those demonstrating such price increases and is contested by adversaries. Analyses were made of the market reaction and return of open companies on the Brazilian stock exchange, BOVESPA, after mergers and acquisitions between July 1994 and July 2002 based upon abnormal returns close to the press releases. The method used was the Event-Study and statistical treatment made use of the One-Way ANOVA and T test (One-Sample Test). Mergers and acquisitions analyzed had no statistically significant impact on the price of the stocks although there was a tendency for abnormal returns to recede after press releases, so that no real gains resulted, contrary to this hypothesis of wealth maximization.

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Published

2005-12-01

How to Cite

Camargos, M. A. de, & Barbosa, F. V. (2005). The hypothesis of wealth maximization for stockholders during mergers and acquisitions - an empirical analysis of Brazilian stocks after the real plan . REGE Revista De Gestão, 12(4), 33-53. https://doi.org/10.5700/issn.2177-8736.rege.2005.36532

Issue

Section

Finanças