The Information Impact of the European Commission Interventions in the Field of Merger and Acquisition Monitoring: The Economics Behind Information Flow Coming to the Market

29 Pages Posted: 25 May 2001

See all articles by Nihat Aktas

Nihat Aktas

WHU - Otto Beisheim School of Management

Eric de Bodt

NHH

Michel Levasseur

Université de Lille

Date Written: April 21, 2001

Abstract

An information flow over a period of time can affect the market in two ways: the value of the concerned assets and the degree of heterogeneity of investor anticipations. In this paper, we focus on the second aspect through the study of the information flow generated by European Commission interventions in the field of merger and acquisition monitoring. Our question is the following: does the information flow coming from the Directorate General of Competition create heterogeneity among investors on the market about the valuation of the concerned asset? We use a sample of 74 firms involved in 45 contested merger and acquisition operations during the years 1990 to 1999. Our methodology is based on the GARCH framework. The main result is that no systematic statistically significant increase in heterogeneity can be attributed to the activities of the European Commission. We conclude that the communication of information to the market by the Directorate General of Competition is done efficiently.

Keywords: heterogeneity, flow of information, event studies, (G)ARCH

JEL Classification: G10, G14, G18, G34

Suggested Citation

Aktas, Nihat and de Bodt, Eric and Levasseur, Michel G., The Information Impact of the European Commission Interventions in the Field of Merger and Acquisition Monitoring: The Economics Behind Information Flow Coming to the Market (April 21, 2001). Available at SSRN: https://ssrn.com/abstract=268970 or http://dx.doi.org/10.2139/ssrn.268970

Nihat Aktas (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Eric De Bodt

NHH ( email )

Helleveien 30
Bergen, NO-5045
Norway

Michel G. Levasseur

Université de Lille ( email )

42, rue Paul Duez
Lille, 59000
France

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