Acquisition Targets prediction in the Egyptian Stock Market: New Empirical Evidence
Keywords:
acquisition, target firms, prediction model.Abstract
Acquisition activity has become one of the most dominant processes in the corporate world to adapt with emerging market terms. As it is considered to be one of the most effective corporate restructuring methods and become an integral part of long term business strategy. Acquisition transactions have its influence on different stakeholders groups and thus, it is not surprising that it has drawn the academic research attention. This study aims to investigate the determinants that can predict target firms in the Egyptian stock market. An acquisition prediction model is created using logit regression and the sample includes 39 target (test sample) and 39 non-target firms (control sample) from 2005 to 2016. The empirical analysis finds only two from 6 variables that have significant influence on acquisition probability. It finds significant positive effect of liquidity as well as negative effect of P/E ratio on acquisition probability.
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