Effects of M&A on the stock prices of companies from different industries

Essay from the year 2020 in the subject Economics - Finance, grade: 1,7, , language: English, abstract: Mergers & acquisitions (M&A) are an important part of corporate financial management. In 2018, the worldwide transaction volume of M&A amounted to 3888 billion USD, which represents an increase of 159 billion USD compared to the previous year. In the outlook for 2020 the bank J.P. Morgan expects companies to stick to their core competencies in the year ahead as opposed to adding new growth legs or entering unproven markets, and M&A activity to be driven by companies looking to strengthen their businesses during periods of prolonged uncertainty. The major US bank sees the reason for this as the influence of success on the company's share price, which rises in successful transactions and falls in risky ones. This influence will be explained further with examples of companies in various industries.