THE EFFECT OF INDUSTRY ON THE VALUE CREATION IN ACQUISITIONS: EVIDENCE FROM TURKEY

Acquisitions are supposed to create value for both the acquirer and the target firm. In this paper, I try to explain the sectoral differences in the profitability of the acquisitions. I analyze 171 out of 898 acquisitions in different industries, in Turkey from 2010 through 2014. I show that the acquisitions in Mining are more profitable compared to other industries with a daily increase of 1.67% in the market value of the acquiring firm. In services and healthcare, acquisitions decrease the value of the acquiring firms with an average decrease of 1.94% and 1.65% in market value, respectively. By calculating the intra-industry effect of acquisitions, I isolate the effect of acquisitions on the market value of the acquirer firm in IT and show that the effect is more significant than the one calculated using the market model.