Disentangling the Link between Stock and Accounting Performance in Acquisitions
34 Pages Posted: 20 Sep 2009 Last revised: 9 Oct 2015
Date Written: January 1, 2014
We study the accounting and stock performance of 4,547 US acquisitions during 1989 and 2008. We categorise acquisitions into four types based on the four possible combinations of positive or negative abnormal stock performance and abnormal accounting performance. First, we compare the bidder, bid and target characteristics across the four types of acquisitions. We find significant differences. Second, with the help of existing theories we explain these differences in bidder, bid and target characteristics by differences in the acquisition motives.
Keywords: Mergers and acquisitions, performance measurement, synergies, preemption, overvaluation, corporate governance, agency problems
JEL Classification: G34, G3, G14
Suggested Citation: Suggested Citation