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Disentangling the Link between Stock and Accounting Performance in Acquisitions

34 Pages Posted: 20 Sep 2009 Last revised: 9 Oct 2015

André Betzer

BUW- Schumpeter School of Business and Economics

Markus Doumet

University of Mannheim - Finance Area

Marc Goergen

Cardiff University - Cardiff Business School; European Corporate Governance Institute (ECGI)

Date Written: January 1, 2014

Abstract

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

Betzer, André and Doumet, Markus and Goergen, Marc, Disentangling the Link between Stock and Accounting Performance in Acquisitions (January 1, 2014). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 259/2009. Available at SSRN: https://ssrn.com/abstract=1474614 or http://dx.doi.org/10.2139/ssrn.1474614

André Betzer (Contact Author)

BUW- Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal
Germany

HOME PAGE: http://finance.uni-wuppertal.de/index.php?id=1153

Markus Doumet

University of Mannheim - Finance Area ( email )

Mannheim, 68131
Germany

Marc Goergen

Cardiff University - Cardiff Business School ( email )

Colum Drive
Cardiff, CF10 3EU
United Kingdom

HOME PAGE: http://www.cf.ac.uk/carbs/faculty/goergenm/index.html

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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