Stock price performances of target firms in unsuccessful acquisitions

This paper examines the stock price returns of 459 targets in unsuccessful M&A deals from 1990 to 2001. An information hypothesis that includes new information arrived after the M&A proposal explains better than the synergy hypothesis the evidence for failed acquisitions. The average abnormal return announcement to termination is a negative 10.61%. Abnormal returns vary according to the identity of the party who terminates the deal. When the target firm rejects a deal, the target stock price drops by 4.33%. The loss is 14.49% when the bidder terminates the deal. In the long-run, abnormal returns are generally insignificant