The Measurement of Operating Performance Following Corporate Acquisitions: A Comparison of Event-Time to Calendar-Time Measures
Posted: 6 Jun 2003
We examine a sample of 1,175 firms following their acquisition of another firm. Consistent with previous work, we measure the operating performance of these firms in event-time, and find that they experience significantly positive abnormal operating performance subsequent to their acquisition. When we measure their abnormal operating performance in calendar-time, however, we find that our sample firms' abnormal operating performance is insignificant. In short, we find that the standard event-time measures of abnormal operating performance overstate the benefits of corporate acquisitions.
Keywords: Mergers and Acquisitions, Operating Performance, Corporate Finance
JEL Classification: G14, G30, G34
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