| Summary: | The objective of this research is to examine short term and long term impact
of merger and acquisition. The impact of the merger and acquisition is analyzed
and compared between external and internal acquisition. The event date is the
date of merger and acquisition announced during 2000-2010. Event study method
is used to analyze market reaction to the announcement of the merger and
acquisition. The samples are taken by purposive sampling method and the results
are 29 observation that consist of 9 observations for the external acquisition and
20 observations for the internal acquisition.
Market model is used to calculate whether there is any abnormal return.
Event windows for short term period are 41 days which consist of 20 days before
merger dan acquisition announcement, the day of merger dan acquisition
announcement, and 20 days after merger dan acquisition announcement. While
the long term observation period is over 2 years or 24 months after merger dan
acquisition announcement. The abnormal return were tested by t test and CAR
were tested by independent sample t test. Data of stock price is daily.
The result show that in the short term, market did not react positively to
external and internal acquisition. For internal acquisition, it is support our
expectation. In the long term, stockholder wealth of external acquiring company
is not higher than stockholder wealth of internal acquiring company over 2 years.
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