The stock market’s evaluation of management decisions: The case of mergers and acquisitions in public liner shipping companies.

Introduction

The liner shipping industry has been undergoing an unprecedented drive for consolidation in recent years primarily effected through a series of high profile mergers and acquisitions.

Mergers and acquisitions may not only have longterm strategic and economic effects; they may also impact directly and immediately on the value of the company as they induce a particular reaction in the stock market with the consequent increase or decrease in share price. A measure that can be used to determine such an impact is the stock market price reaction of the company around the event (announcement) day.

This article summarizes the findings of a recent study which we conducted, with a focus on the stock prices reaction of four listed liner shipping companies which engaged in mergers and acquisitions (M&A).

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