The objective of this study is to analyze the stock marketreaction to the recent stream of merger announcements by UStelecommunications service providers. The study offers mergerscharacteristics, classification and an analysis of the motives for thetelecom service providers to merge. In order to show the valuationeffect of the merger announcements, short-term and intermediate-termcumulative abnormal returns are calculated for bidders and targets forindividual mergers and for different groups of mergers. Overall, theauthors find that mergers announced by long distance companies areperceived much riskier than those announced by local companies. Theyalso find that there are different stock market reactions for mergersannounced by long distance bidders for long distance, cable, and localtargets. Some qualitative explanations of these findings are proposed
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