Discussion paper

DP6176 The Effect of EU Antitrust Investigations and Fines on a Firm?s Valuation

We estimate, using event study techniques, the impact of the main events in an antitrust investigation on a firm?s stock market value. A surprise inspection at the firm?s premises has a strong and statistically significant effect on the firm?s share price, with its cumulative average abnormal return being approximately -2%. Further, we find that a negative Decision by the European Commission results in a cumulative average abnormal return of about -3.3%. Overall, the fine accounts for a relatively small fraction of this loss in value. Finally, if the Court annuls or reduces the fine, this has a positive (+2%) effect on the firm?s valuation.

£6.00
Citation

Motta, M and G Langus (2007), ‘DP6176 The Effect of EU Antitrust Investigations and Fines on a Firm?s Valuation‘, CEPR Discussion Paper No. 6176. CEPR Press, Paris & London. https://cepr.org/publications/dp6176