Impact of Mergers and Acquisitions on the stock price behavior of Merger and Acquirer Companies in Oil and Gas Industry

摘要

Mergers and Acquisitions is a corporate strategy that fetches synergy benefits, accelerate growth, improves performance quality, acquire technology, skills, and eliminate the excess capacity of the business. Oil & Gas Industryis of great importance for developing countries. This industry supports many industries together like transportation, aviation, manufacturing, other ancillary sectors. To study the share price behavior and the impact three analysis and methods are used and those are Market study, Event - study method by computing Cumulative Abnormal Returns (CAR), and Developing GARCH model. To analyze the impact of mergers and acquisitions on the CAR, the Cumulative Abnormal Return (CAR) is computed for the merger and acquiring companies using two event windows and they are - 31 days (-15, 0, +15) and 7 Days (-3, 0, +3). The expected return on the stock for each day was calculated using the CAPM model. To analyze the stock price behavior, Autoregressive Conditional Heteroskedasticity (ARCH) model is used. Results and outcome revealed that there werea remarkable effect and unremarkable effect on the abnormal return of mergers and acquisitions in the selected companies in the Oil & Gas industry.