The Long-Horizon Performance of Acquiring Firms: The French Evidence

26 Pages Posted: 26 Mar 2001

Date Written: November 2000

Abstract

The purpose of this paper is to report the evidence of the long-horizon abnormal returns of 80 French acquiring firms, involved in a tender offer between 1977 and 1993. We find four results: (1) tender offers lead to a wealth-destruction for French acquiring firms, which experience a mean abnormal return of -25.41% over a long-horizon window of 39 months; (2) over the pre-acquisition window, the mean abnormal return (0.32%) is not significant, but we observe an opposition between the pre-winners (12.33%) and the pre-losers (-9.02%); (3) over the post-acquisition window, the mean abnormal return is negative (-24.22%) and significant at the 1% level, but the wealth-destruction is greater for the pre-losers (-35.03%) than for the pre-winners (-10.31%); (4) in 70% of the cases, the market is capable of anticipating whether a tender offer leads to a wealth-creation or a wealth-destruction, but it fails to quantify the extent of the wealth-variation.

Suggested Citation

Petitt, Barbara S., The Long-Horizon Performance of Acquiring Firms: The French Evidence (November 2000). Available at SSRN: https://ssrn.com/abstract=264769 or http://dx.doi.org/10.2139/ssrn.264769

Barbara S. Petitt (Contact Author)

CFA Institute ( email )

131 Finsbury Pavement
7th Floor
London, EC2A 1NT
United Kingdom

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