Proceedings of the 18th International Academic Conference, London

SYNERGY EFFECT OF M&A HETEROGENEITY AND ALLIANCE HOMOGENEITY ON STOCK MARKET

JAISANG KIM

Abstract:

Since Merger and Acquisition (M&A) and Strategic Alliance have been regarded as essential parts of successful strategies for profitable growth till date, none of previous researches investigated stock market’s response toward the synergy effect of M&A strategy and Strategic Alliance from the perspective of behavioral economics—more precisely—prospect theory. Therefore, by examining the synergy effect of M&A and Strategic Alliance and applying ‘prospect theory’ to stock price response, the goal of our research is to empirically test unconventional responses of stock market and ‘synergetic relation’ between M&A and Strategic Alliance. By doing so, this research will prove that two strategies can work together for better performance in the stock market.

Keywords: Synergy effect ,Merger and Acquisition (M&A), Strategic Alliance, portfolio theory, prospect theory, loss aversion.

DOI: 10.20472/IAC.2015.018.062

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