This study analyzes changes in stock price behavior surrounding acquisition announcements. I develop a theoretical model incorporating the market’s ability to process information when an acquisition occurs in the context of the efficient market hypothesis. I then empirically test the market’s capacity for internalizing information through proxies of search engine traffic and news mentions on price behavior before and after the announcement date. Tracking first differences and controlling for firm, year, industry, and market characteristics, when investors are uncertain about a stock’s value after an acquisition, they increase their search for information with consequences on both price and variance. These results support only semi-strong efficiency since investors fail to immediately interpret and agree on the information set.


Histen, Joe


Business Economics

Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



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