Domestic mergers and acquisitions in BRICS countries: Acquirers and targets

- Study acquirer and target value effects for domestic M&A transactions in BRICS countries
- Targets earn significant positive announcement returns
- Analysis of cross-sectional drivers of the CAR around the acquisition announcement
- Target returns negatively related to pre-announcement returns and size, positively related to GDP growth.

We study the firm value determinants for domestic acquisitions within BRICS countries considering both acquirer and target shareholders. Targets earn significant positive announcement returns of 1.45% on average. Acquirers lose slightly. We employ a comprehensive set of explanatory variables and test for cross-sectional return drivers. Target returns are negatively related to pre-announcement returns and firm size, while they are positively related to GDP growth. Our results are consistent with insider trading capturing some of the target excess returns, which are highest for small targets based in countries with high recent GPD growth.