Learning from Repetitive Acquisitions: Evidence from the Time between Deals

51 Pages Posted: 26 Mar 2008 Last revised: 2 Oct 2012

See all articles by Nihat Aktas

Nihat Aktas

WHU - Otto Beisheim School of Management

Eric de Bodt

NHH-Caltech

Richard Roll

California Institute of Technology

Date Written: July 18, 2012

Abstract

Knowledge gleaned from previous acquisitions may confer valuation expertise and other benefits. But numerous acquisitions also entail costs, due to problems of incorporating diverse units into an ever larger firm. Such benefits and costs are not directly observable from outside the firm. This article proposes a simple model to infer their relative importance, using the time between successive deals. The data requirements are minimal and allow the use of all mergers and acquisitions during 1992–2009 (more than 300,000 deals). The results provide evidence of learning gains through repetitive acquisitions, especially under CEO continuity and when successive deals are more similar.

Keywords: Acquisitions program, Learning, Integration costs, Time between successive deals

JEL Classification: G32, G34

Suggested Citation

Aktas, Nihat and de Bodt, Eric and Roll, Richard W., Learning from Repetitive Acquisitions: Evidence from the Time between Deals (July 18, 2012). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=1107218 or http://dx.doi.org/10.2139/ssrn.1107218

Nihat Aktas

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Eric De Bodt (Contact Author)

NHH-Caltech ( email )

18B AVENUE BECHET
Kraainem, 1950
Belgium
+32 475 24 01 69 (Phone)

Richard W. Roll

California Institute of Technology ( email )

1200 East California Blvd
Mail Code: 228-77
Pasadena, CA 91125
United States
626-395-3890 (Phone)
310-836-3532 (Fax)

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