THE IMPACT OF ACQUISITIONS ON NEW TECHNOLOGY STOCKS: THE GOOGLE–MOTOROLA CASE

This paper analyzes the impact of the recent acquisition of Motorola by Google on the subsequent performance of stock returns using an event study methodology. We obtain empirical results by a two-stage regression, by which the impact of market and industry effects can be controlled for. Our findings suggest that the Motorola takeover led to negative and significant excess returns to Google, but positive and highly significant excess returns to Motorola. Additionally, while the event led to significantly positive excess returns to direct competitors, it did not have a strong impact on indirect competitors, suggesting that the importance of the event was restricted to related industries.