Mergers and Acquisitions in Up- and Down-Markets - An event study analysis of the impact of the market valuation on mergers and acquisitions and their future operating performance

Abstract: In this paper I conduct an event study to examine a sample of 394 US mergers and acquisitions during the period 1997-2013. The aim of this research is to add to the empirical literature that studies acquisition strategies. I come to the conclusion that there is no significant difference in bidder CAR depending on if the announcement happened in an up- or down-market. However, the operating performance, as measured by various key accounting ratios is significantly different. Furthermore, my data suggests that there are other factors that also differ depending on the market valuation at the time of the M&A announcement.