The Impact of Merger and Acquisition on Investor Reaction and Acquirer Firm’s Financial Performance in Technology Firms

DOI

10.2991/aebmr.k.211124.057How to use a DOI?

Keywords

Merger and acquisition; Investor reaction; Financial performance

Abstract

Nowadays, technology sectors are continuously developing through merger and acquisition activities. Previous literature found that mergers and acquisitions affect both investor reaction and firm’s financial performance on separate studies. However, there were contradictory results between the positive and negative impacts. Therefore, this study aims to simultaneously search the impact of mergers and acquisitions on investor reaction and acquirer firm’s financial performance. The technology sector is chosen in this study as there are fewer studies regarding investor reaction and financial performance in this sector. The investor reaction is measured using Cumulative Abnormal Return (CAR). Whereas an acquirer firm’s financial performance is measured using Return on Asset (ROA). This study used companies’ data that have merger and acquisition transactions from 2015 through 2019. To be included as a sample, the company must have a headquarter in Asia and must be a public company in the technology sector. The data analyzing method used in this study is Ordinary Least Square (OLS). The findings suggest that mergers and acquisitions have a positive and statistically significant impact on investor reaction in the short term. However, the positive impact on the acquirer firm’s financial performance is not statistically significant. Due to restrictions in accessing internal company’s data, this study could only be conducted on public companies. This study contributes to previous literature related to investor reaction and firm’s performance as both of them are rarely tested simultaneously in previous studies especially in the technology sector.

Copyright

© 2021 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Juniarti Juniarti
AU  - Yosephine Kurnia Anggita
AU  - Angeline Angeline
PY  - 2021
DA  - 2021/11/25
TI  - The Impact of Merger and Acquisition on Investor Reaction and Acquirer Firm’s Financial Performance in Technology Firms
BT  - Proceedings of the 6th International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 2021)
PB  - Atlantis Press
SP  - 392
EP  - 403
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.211124.057
DO  - 10.2991/aebmr.k.211124.057
ID  - Juniarti2021
ER  -