What Goes Wrong in M&As? On the Long-Run Success Factors in M&As

77 Pages Posted: 22 Dec 2018

See all articles by Luc Renneboog

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Cara Vansteenkiste

UNSW Australia Business School, School of Banking and Finance

Date Written: December 20, 2018

Abstract

This paper provides an overview of the academic literature on the market for corporate control, and focuses specifically on firms’ performance around and after a takeover. Despite the aggregate M&A market amounting to several trillions USD on an annual basis, acquiring firms often underperform relative to non-acquiring firms, especially in public takeovers. Although hundreds of academic studies have investigated the potential determinants of M&A success, the wide variety of performance measures and sample sizes complicates the drawing of accurate and unambiguous conclusions. In this light, our survey compiles the recent literature and aims to identify which factors robustly contribute to and which factors hurt long-run deal success. We identify that long-run deal performance is affected by key determinants such as serial acquisitions driven by CEO overconfidence, acquirer-target relatedness and complementarity, and shareholder intervention in the form of voting or activism.

Keywords: Takeovers, Mergers and Acquisitions, Long-Run Performance, Corporate Governance

JEL Classification: G34

Suggested Citation

Renneboog, Luc and Vansteenkiste, Cara, What Goes Wrong in M&As? On the Long-Run Success Factors in M&As (December 20, 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 589/2018. Available at SSRN: https://ssrn.com/abstract=3304601 or http://dx.doi.org/10.2139/ssrn.3304601

Luc Renneboog (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

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

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Cara Vansteenkiste

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
398
Abstract Views
1,193
rank
75,681
PlumX Metrics