Firm Size, Serial and Non-Serial Acquisition, and Stockholder Wealth

55 Pages Posted: 15 Mar 2016 Last revised: 5 Feb 2018

See all articles by Hang Li

Hang Li

University of Birmingham - Birmingham Business School

Nicholas F. Carline

Department of Finance, Birmingham Business School, University of Birmingham

Hisham Farag

University of Birmingham - Birmingham Business School

Date Written: February 4, 2018

Abstract

Acquisitions by larger firms seem to generate less wealth for acquirer stockholders than acquisitions by smaller firms. In this paper, we re-examine the ‘size effect’, but separately for serial and non-serial acquisition. We find sample-selection bias results in a spurious size effect for non-serial deals, but that it does not affect the size effect for serial deals. Our results suggest this is because smaller non-serial acquirers require greater time-varying synergies than larger non-serial acquirers. In contrast, larger serial acquirers are associated with persistent synergies to a greater extent than smaller serial acquirers. Our findings are consistent with rational managerial behavior.

Keywords: firm size; acquisition; serial acquirer; stockholder wealth; sample-selection bias

JEL Classification: G34

Suggested Citation

Li, Hang and Carline, Nicholas F. and Farag, Hisham, Firm Size, Serial and Non-Serial Acquisition, and Stockholder Wealth (February 4, 2018). Available at SSRN: https://ssrn.com/abstract=2747890 or http://dx.doi.org/10.2139/ssrn.2747890

Hang Li

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Nicholas F. Carline (Contact Author)

Department of Finance, Birmingham Business School, University of Birmingham ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Hisham Farag

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

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