The impact of acquisition announcement to stock return of bidder companies (Malaysian property sector's case) 1999-2005 / Nazarudin Ahmad

The empirical study examines the stock performance through determination of stock price of bidding companies where the bidding companies usually incur a negative abnormal return. The conventional wisdom from merger studies in recent years is that shareholders of acquired companies earn positive abnormal returns in the days or months surrounding merger, whereas the returns to acquiring companies are more mixed Lahey (1985). In this research the target companies will not be taken into consideration because most companies being acquired in Malaysia were small companies which have not been listed yet in Bursa Malaysia. The focus is solely on the performance of bidder companies. Besides that, this will specifically focus on the sector in Malaysia because different kind of sector might affect the result of the study. Most of the companies taken were taken from the period of 2000 until 2005 to avoid any other factors that might affect stock performance of companies such as economic downturn that usually occur once in ten years time. The basic calculation for the research is to know how the real prices of stock differ from its expected price. Its expected prices are derived based on the market movement as the benchmark. Thus, when acquisition announcement is made, significant changes to the price is studied to determine whether acquisition announcement has or not, significant effect to the price of stock and then to the return of stock.