The Impact of Acquisitions on Operating Performance: Some Australian Evidence

Posted: 26 Feb 2002

See all articles by Divesh Sharma

Divesh Sharma

Kennesaw State University, School of Accountancy

Jonathan Ho

KPMG International, LLP - Department of Auditing

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Abstract

This study investigates the impact of acquisitions on the operating performance of Australian firms. For a sample of 36 Australian acquisitions occurring between 1986 to 1991 inclusive, and using matched firms to control for industry and economy-wide factors, the results based on four accrual and four cash flow performance measures show that corporate acquisitions do not lead to significant improvements in post-acquisition operating performance. The consistency of the results with the agency, the hubris and the financial motivation hypotheses suggests that corporate acquisitions in Australia may be undertaken for other than synergistic reasons. The results assist explain inconsistent findings reported in the literature.

Keywords: Acquisition; Merger; Operating performance; Cash flow

JEL Classification: G34, M41

Suggested Citation

Sharma, Divesh Shankar and Ho, Jonathan, The Impact of Acquisitions on Operating Performance: Some Australian Evidence. Available at SSRN: https://ssrn.com/abstract=299472

Divesh Shankar Sharma (Contact Author)

Kennesaw State University, School of Accountancy ( email )

Kennesaw, GA 30144
United States

Jonathan Ho

KPMG International, LLP - Department of Auditing

16 Raffles Quay #22-00
Hong Leong Building
Singapore 048581
Singapore

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