Stock-market reactions to mergers of non-financial Turkish firms

This paper investigates stock-market reactions to mergers and partial sales of non-financial Turkish firms. Turkish targets earn average cumulative abnormal returns (CAR) of 8.56 percent in the three-day window around merger announcements when bidders purchase control rights and 2.25 percent when they do not. The results indicate that acquirers pay a premium to purchase control rights. The smaller magnitude of target CAR in Turkish mergers (relative to CAR of around 20 percent in US and 10 percent in Europe) may be explained by:

1. the reduction in the power of event study method to capture the effect of merger announcements due to information leakages and misidentification of announcement dates; and
2. the differences in Turkish regulatory, operational and competitive environment.