Impact of Mergers and Acquisitions on the Forest Products Industry: An Event Study of Stock Market Returns

The forest products industry in the U.S. has witnessed an unprecedented period of mergers and acquisitions (M&A) in the past decades. In this study, 57 major M&A events in the forest products industry were assessed by event analysis. By focusing on firm-level performance, financial data from the capital market were used to measure the impact of M&A events on the performance of firms. The abnormal returns implied capital market reacted positively to M&As in U.S. forest products industry as a whole, leading to a significant enhancement of the firms’ market value. However, the acquiring firms experienced no significant response from the capital market. The results from cross-sectional regressions indicated that the position of a firm in the M&A event explained most of the variations of the cumulative abnormal return. The risk analyses for the acquiring firms in the selected 14 M&A events showed that the risk for most of them has experienced limited changes after the M&A events.