Batool K. Asiri, Salwa A. Hameed
This paper attempts to measure the reaction of investors toward the Merger and Acquisition (M&A) announcements by all listed banks on Bahrain Bourse. Thirty different announcements are considered from 2005 to 2017. Event study is employed and results show that the investors gained on average 0.54% cumulative abnormal return (CAR) on the announcement date and lost 2.81% over 60 days around the announcement day. Separating the sample into Islamic and conventional banks, the investors gained 6.14% cumulative average abnormal returns (CAAR) from the Islamic banks while lost 13.03% from the conventional banks. Findings also point out that the investors lost 6.44% when the announcement was by the target banks compared to a loss of only 0.99% by the acquirer banks. The paper concludes that Bahrain Bourse is not efficient in the semi-strong form and there is a scope for abnormal profits for the investors.