Publication type: Conference other
Type of review: Not specified
Title: The effectiveness of European antitrust policy : evidence from the stock market
Authors: Günster, Andrea Maria
et. al: No
Conference details: 35th EARIE Annual Conference, Toulouse, France, 4.-9. September 2008
Issue Date: 2008
Language: English
Subject (DDC): 332.6: Investment
Abstract: This paper analyzes the stock market response to antitrust investigation announcements and decisions to assess the effectiveness of European antitrust policy. We analyse a sample of 269 publicly traded companies involved in 118 antitrust cases over the period 1978 - 2004. We uncover significantly negative abnormal stock returns around the time of the dawnraid and around the final decision date. The average abnormal stock return is around -4.5 % for the dawnraid and close to -2 % for the final decision. These stock price reactions translate in to a decrease of almost 50 billion in the aggregate market value of the companies involved. These valuation effects can only to a limited extent be explained by fines and legal costs. Stock markets, it seems, anticipate a decrease in future profitability. We examine the relation between the stock price reaction and several case and company characteristics. We shed light on several policy issues, including the 1996 Leniency Notice. Overall, our results suggest that European antitrust policy has a profound impact on the value of the companies involved.
Fulltext version: Published version
License (according to publishing contract): Licence according to publishing contract
Departement: School of Management and Law
Organisational Unit: Center for Economic Policy (FWP)
Appears in collections:Publikationen School of Management and Law

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