Impact of mergers and acquisitions on stock prices: The U.S. ethanol-based biofuel industry

Corporate restructuring activities in the form of mergers and acquisitions (M&As) are ongoing in the U.S. ethanol-based biofuel industry. With regard to M&As, a widespread concern is about financial performance of an individual firm and stable financial performance of the overall industry. Using an event analysis method, this study explores the impact of recent M&As on stock prices and value of the firm of publicly traded ethanol-based biofuel industry between 2010 and 2012 in the United States. Results regarding the average cumulative abnormal returns of acquiring firms suggest that the market positively responded toward recent M&As in the industry. Around 4% positive growth on a 60-day event window was attributed to M&As using market-adjusted market portfolio. A significant positive 0.47% gain in cumulative returns in a 4-day event window and a 2.7% positive gain in a 10-day event window were suggested by this study. (C) 2013 Elsevier Ltd. All rights reserved.