HORIZONTAL AND VERTICAL TAKEOVER AND SELL-OFFANNOUNCEMENTS: ABNORMAL RETURNS DIFFER BY INDUSTRY

We begin with the hypothesis that shareholder-wealth effects of corporate transactions differdepending on (a) the specific industry, (b) whether they are horizontal or vertical, and (c) whetherthey are integrations (takeovers) or disintegrations (partial sell-offs). A standard event study analysisfor cumulative abnormal returns based on the market model is conducted for 309 data-points from227 transaction announcements. We find that abnormal returns indeed do significantly depend onthe transaction profile (horizontal vs. vertical and integration vs. disintegration) and industry. Onemain result is the observation that the capital market shows distinctive preferences for either anintegration or disintegration strategy for vertical as well as for horizontal transactions. The specificpattern of this preference differs according to industry.