2007), 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. ∗A number of people helped us in various ways in this project. In particular, w