The effect of mergers and acquisitions announcement on share prices - evidence on the Nairobi Stock Exchange
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Date
2008-10Author
Barasa,Constantine M.
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The mam objective of this study was to evaluate market efficiency in relation to
information content of merger announcement by companies quoted on the NSE.
The study covered 11 companies quoted on the NSE from 1997 - 2006, a period of 10
years. The methodology used is event study. The event in question was merger&
acquisition announcements made by the firms during the study period. The market model
approach was used in the event study. For testing whether there was significant variation
in stock returns after the merger announcement, cumulative abnormal
returns(CAR)graphs were constructed and t-tests used to establish whether the CAR were
significant.
The findings of the study indicate that majority of the companies' stock returns did not
experience a significant reaction to merger announcement which is not typical of stock
markets in developing countries.
The mam conclusion drawn from the study was that the reaction to the merger
announcements was not significant .Some reactions to the merger announcements were
positive while some were negative. Thus given that the market is efficient, investors can
not expect significant variations in the stock prices/returns after merger announcement by
firms.
Citation
Masters Of Business Administration (MBA) Degree, University of NairobiPublisher
University of Nairobi School of Business
Description
A management research project submitted in partial
fulfilment of the requirements for the Degree Of
Master of Business Administration (MBA), Faculty of
Commerce, University of Nairobi