Effects Of Merger And Acquisition Announcements On Stock Prices Of Acquiring Companies In Vietnam's Stock Market

Abstract

Mergers and acquisitions offer benefits to companies seeking to redefine their position in the market. By incorporating new capabilities into their products, companies can quickly expand their market presence and alter their market position. When a merger or acquisition is announced, it discloses significant information about the deal, which can be used to assess the stock market's reaction to the news. The objective of this study is to analyze the impact of merger and acquisition announcements on the stock prices of acquiring companies (domestic companies) on Ho Chi Minh Stock Exchange (HOSE). The study employs an event study method, utilizing secondary data for analysis. The impact is measured through abnormal returns (AR), cumulative abnormal returns (CAR), average abnormal returns (AAR), and average cumulative abnormal returns (CAAR) to determine the effect of the event on the sample's stock price. The research findings indicate that stock prices undergo immediate changes following the announcement of mergers and acquisitions. However, in some cases, stock prices decline after the announcement, while in other cases, they increase. Several listed companies have observed exceptional returns. However, for certain companies, this announcement does not have a significant impact on their equity and earnings. The study reveals that merger and acquisition announcements significantly affect cumulative total stock returns for different acquiring companies before and after the announcement. The study reveals that merger and acquisition announcements significantly affect cumulative total stock returns for different acquiring companies before and after the announcement. This research provides valuable knowledge for Vietnamese investors to make informed decisions when faced with any M&A announcement in the Vietnamese stock market.