Wealth of Merger and Acquisition on Acquiring Firms in Brazil

In this article, the authors examine the distribution of the stock returns for the acquiring firm and the corresponding market index. They find that significant non-normal distributions exist in a large number of acquiring firms. The authors use two robust regressions to examine the reliability of the standard OLS market models and find that no significant abnormal gain or loss in the selected windows, when all sample deals are included for analysis. However, positive abnormal returns appear in almost all selected windows when analysing deals in financial service industry, and negative abnormal returns appear in almost all selected windows when analysing deals in non-financial industries. Selection of the model and formation of the sample affect the results.