Anticipating Acquirers

79 Pages Posted: 11 Mar 2020 Last revised: 3 Jun 2020

See all articles by Antonio J. Macias

Antonio J. Macias

Baylor University

P. Raghavendra Rau

University of Cambridge

Aris Stouraitis

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences

Date Written: June 3, 2020

Abstract

Prior literature documents that acquirers earn declining returns to acquisitions as they continue acquiring. Using a novel typology of serial acquirers, we show that subsequent acquisitions by acquirers are predictable ex ante. Controlling for market anticipation, there is little evidence that acquirers earn declining returns in their acquisitions sequence. We also find strong evidence of persistence in performance in acquirers, both for prior winners and prior losers. However persistent winners are not frequent acquirers. Persistent losers appear to be overvalued at the time of the acquisition and pay with overvalued stock, leaving them better off than if they had never acquired. Our methodology significantly enhances our understanding of acquisition dynamics compared to previous studies.

Keywords: Serial acquirers, Mergers, Acquisitions, M&A, Anticipation, Persistence, Misvaluation

JEL Classification: G14; G34; G35

Suggested Citation

Macias, Antonio J. and Rau, P. Raghavendra and Stouraitis, Aristotelis, Anticipating Acquirers (June 3, 2020). Available at SSRN: https://ssrn.com/abstract=3526572 or http://dx.doi.org/10.2139/ssrn.3526572

Antonio J. Macias (Contact Author)

Baylor University ( email )

Waco, TX 76798
United States

P. Raghavendra Rau

University of Cambridge ( email )

Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)

HOME PAGE: http://www.raghurau.com/

Aristotelis Stouraitis

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences ( email )

Hong Kong

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