Value Creation through Acquisitions: The event study of Russian traded companies

Abstract

The current study is an examination of the long-term abnormal returns of the Russian traded companies that performed their major acquisitions within the period of 2006 – 2012. The research was conducted based on Oil & Gas, Metals & Mining, and Financial sectors. The goal was to identify whether Russian acquiring companies listed on MICEX deliver significantly positive excess returns compared to MICEX Index and corresponding MICEX Sector Indices. For the purposes of this paper three rebalanced sector event portfolios were formed. The primary conclusion of the research is that companies from Oil & Gas and Financial sectors that are engaged in acquisition activity do experience long-term significantly positive abnormal returns while compared to their peers. In case of companies from Metals & Mining sector, the empirical study shows that the market is irrelevant to this particular event.