Mergers and acquisitions: assessment of the impact on the profitability of the buyer company`s shares

In this study, based on the event analysis method, the market reaction regarding the date of announcement and execution of mergers and acquisitions was studied. Within the framework of the article, the following research goal was set - to analyze the change in the profitability of the shares of the buyer company relative to the merger and acquisition transaction. The study is based on 287 observations around mergers and acquisitions between Russian oil and gas companies in the period from 2002 to 2020 based on stock quotes and the Moscow Exchange Index (IMOEX). The calculations obtained showed that as a result of the transaction, it is impossible to unequivocally assert an increase in the profitability of the buyer’s shares when comparing it with the projected profitability in the absence of a transaction. Nevertheless, the market will react more strongly to the fact of the transaction itself than to the news about the upcoming transaction. The obtained research results are applied in the framework of managerial decision-making in the stock market. In particular, the authors concluded that after the closing of the 1st trading session, in which there is a significant AR, it is necessary to open a short-selling position.