When a company announces a new acquisition, managers hold their breath in anticipation of the market’s reaction. If the share price goes up, they see that as a vindication of the deal. Whether or not this is a good indicator of long-term value creation, it does offer insights into investors’ perceptions of the risks acquirers face in implementing deals. And in the aggregate, announcement effects offer a general perspective on the markets’ reaction to deals over time.
This interactive focuses on two salient questions. First, do investors think that deals created value—and for whom—given the limited information they have in the days following the announcement? And do they believe that the value acquired was worth the price paid for it?