CROSS-BORDER M&A AND INTERNATIONAL STOCK MARKET INTEGRATION – EVIDENCE FROM TURKEY

The objective of this paper is to analyze the impact of cross-border takeover announcements on Turkish shareholders wealth with a focus on capital market integration. We therefore examine whether announcement effects of takeovers differ for shareholders in a country like Turkey with limited shareholder protection, a developing capital market and a highly growing economy from studies for developed markets. We find significant positive abnormal returns for Turkish acquirers. However, we provide results showing that the Turkish capital market perceives cross-border takeovers as more profitable than domestic transactions. In relation to capital market integration the results confirm that the Turkish capital market is more integrated into the European than the Asian capital market. In the multivariate analysis we show that the stock price reactions of takeover announcements are negatively correlated with distance between target nation and Turkey.