Takeovers of Technology Firms: Expectations vs. Reality

Financial Management, Vol. 30, Iss. 3, Autumn 2001

Posted: 3 Jan 2002

See all articles by Ninon Kohers

Ninon Kohers

University of South Florida - College of Business Administration

Theodor Kohers

Mississippi State University - College of Business

Abstract

The distinctive high-growth, high-risk nature of technology-based industries raises important questions about the creation of wealth in takeovers of technology firms. Although acquiring firm shareholders respond favorably to high-tech takeover announcements, these acquirers generally underperform industry-matched benchmarks and size- and book-to-market matched control portfolios in the long run. A key factor related to poor post-merger performance is a low bidder book-to-market ratio, especially when combined with a bidder ownership structure with high potential for agency problems. These findings suggest that the market tends to exhibit excess enthusiasm about the expected benefits of certain high-tech acquisitions.

Suggested Citation

Kohers, Ninon and Kohers, Theodor, Takeovers of Technology Firms: Expectations vs. Reality. Financial Management, Vol. 30, Iss. 3, Autumn 2001. Available at SSRN: https://ssrn.com/abstract=292603

Ninon Kohers (Contact Author)

University of South Florida - College of Business Administration ( email )

4202 E. Fowler Avenue, BSN 3403
Dept. of Finance
Tampa, FL 33620-5500
United States
813-974-6337 (Phone)
813-974-3030 (Fax)

HOME PAGE: http://www.coba.usf.edu/departments/finance/facult

Theodor Kohers

Mississippi State University - College of Business ( email )

Finance and International Business
Mississippi State, MS 39762-0964
United States
662-325-2341 (Phone)
662-325-1977 (Fax)

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