Analysis of Market Efficiency Following Cancelled M and A Deals: From a Target's Perspective

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Over the last decade the numbers of mergers and acquisitions have increased, and only a small fraction of these are cancelled. In this thesis the market efficiency post an announced cancellation is analysed by performing an event-study based on 101 cancelled deals among the North American-, European-, Asian- and Australian markets. The study shows that the reactions are inefficient on all markets and a divergence between the North American and the combined European and Asian/Australian market is noticeable. Further, it is clear that there is an evident distinction depending on the actor of cancellation, however, no such distinction has been found depending on means of payment. An profitable investment strategy based on the results is drawn which indicates that one should short sell acquirer companie...