The Anatomy of Acquirer Returns

56 Pages Posted: 19 Aug 2019

See all articles by Olivier Dessaint

Olivier Dessaint

University of Toronto - Rotman School of Management

B. Espen Eckbo

Tuck School of Business at Dartmouth; European Corporate Governance Institute (ECGI)

Andrey Golubov

University of Toronto - Rotman School of Management

Date Written: August 15, 2019

Abstract

Largely constant average acquirer returns over the past four decades mask fundamental changes in the takeover market. Controlling for bidder composition, the common component of acquirer returns has increased by as much as five percentage points relative to the 1980s. Offsetting this increase, the average bidder-specific component has declined. The increase in the common component is pervasive and cannot be explained by learning, maturity, industry concentration, or improved corporate governance. However, better advisors may have contributed to this upward trend. Conceptually, the evidence is consistent with a general increase in merger synergies that have become less bidder-specific over time.

Keywords: Mergers and Acquisitions, Synergies, Bidder Gains, Bidder Specificity, Composition Effects, Investment Banks

JEL Classification: G14, G34

Suggested Citation

Dessaint, Olivier and Eckbo, B. Espen and Golubov, Andrey, The Anatomy of Acquirer Returns (August 15, 2019). Tuck School of Business Working Paper No. 3437865. Available at SSRN: https://ssrn.com/abstract=3437865 or http://dx.doi.org/10.2139/ssrn.3437865

Olivier Dessaint

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

B. Espen Eckbo

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States
603-646-3953 (Phone)
603-646-3805 (Fax)

HOME PAGE: http://www.tuck.dartmouth.edu/eckbo

European Corporate Governance Institute (ECGI)

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

Andrey Golubov (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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