The Acquisition Performance of S&P 500 Firms

37 Pages Posted: 8 Dec 2006

See all articles by Anand M. Vijh

Anand M. Vijh

University of Iowa - Department of Finance

Ke Yang

Lehigh University

Date Written: March 2007


We compare the acquisition performance of S&P 500 and non-S&P 500 firms after controlling for differences in firm characteristics. During 1980-2004, S&P 500 firms make a greater number and dollar value of acquisitions. They more often use cash payment and tender offers, the market reacts better to the announcement of their acquisitions, and they are more likely to complete their deals. The target shareholders seem to attach incremental value to joining with an S&P 500 firm and accept a lower premium in stock deals. The S&P 500 acquirers also have stronger pre-acquisition operating performance, choose targets with stronger pre-acquisition performance, and realize significant gains in post-acquisition performance. We interpret the combined evidence as consistent with the efficiency hypothesis, which suggests that S&P 500 firms are more efficiently managed firms and make better acquirers.

Keywords: S&P 500, Mergers and Acquisitions, Efficiency, Operating Performance

JEL Classification: G34

Suggested Citation

Vijh, Anand M. and Yang, Ke, The Acquisition Performance of S&P 500 Firms (March 2007). Available at SSRN: or

Anand M. Vijh

University of Iowa - Department of Finance ( email )

Iowa City, IA 52242-1000
United States
319-335-0921 (Phone)
319-335-3609 (Fax)

Ke Yang (Contact Author)

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States
6107583684 (Phone)
6107586429 (Fax)

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