Abstract
The primary purpose of this study was to investigate the effect of Mergers and Acquisitions (M&A) announcements on bidding companies’ share prices that were listed on the Johannesburg Stock Exchange (JSE) for the period 1 January 2010 to 31 December 2017. The study applied the classical event study methodology using the Abnormal Returns (AR), Average Abnormal Returns (AAR), and Cumulative Average Abnormal Returns (CAAR) of the bidding company to measure the effect of the announcements. The primary sample used in the study consisted of 38 bidding companies listed on the Johannesburg Stock Exchange with 76 observations in total. The sample was tested for any abnormal returns that arose pre-and-post the Mergers and Acquisitions announcement date using a 15-day event window period. The study provided empirical evidence that there were significant negative abnormal returns attained during the 15 days (-7, 0, +7), where 0 denoted the announcement day. Mergers and Acquisitions announcements were used for the selected bidding companies listed on the Johannesburg Stock Exchange.
M.Com. (Finance)