The long-term performance of acquiring firms: A re-examination of an anomaly

Dutta, Shantanu; Jog, Vijay M.

doi:10.1016/j.jbankfin.2009.02.004

Cited by 121 publications

(49 citation statements)

References 52 publications

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“…Furthermore, it is expected that managerial attention is positively correlated with the relative size of the target firm, which in turn may increase the efficiency of synergy realization (see Larsson and Finkelstein 1999). On the other side, firm size may also increase managerial difficulties (see Dutta and Jog 2009). However, we presume that on balance the positive effect of relative firm size weighs more.…”

Section: Relative Sizementioning

confidence: 95%

How Swiss small and medium-sized firms assess the performance impact of mergers and acquisitions

Arvanitis

Stucki

2013

Small Bus Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. primarily affected by specific M&A characteristics, but not by general market characteristics such as demand development or competition conditions. Rather astonishingly, it is also not affected by firm characteristics such as capital intensity, human capital endowment and firm size. Terms of use: Documents in EconStor mayThere is an interesting exception: innovation activities. This means that with the remarkable exception of innovation activities the level of M&A performance is determined primarily by factors of the M&A process itself. There is a broad theoretical and empirical literature on the economic performance of mergers and acquisitions (M&A) (see, e.g., Agrawal and Jaffe 2000;Kaplan 2000; Martynowa and Renneboog 2008;Gugler et al. 2012). Nevertheless, some aspects remain under-researched, particularly, those that are specific to small and medium-sized firms (SMEs). This neglect of M&A studies that refer to SMEs may be traced back, firstly, to the fact that the majority of empirical studies rely on stock market-based measures of performance (see Bild 1998;King et al. 2004;McDonald et al. 2008;and Meglio and Risberg 2011). As such information is not available for the majority of SMEs, the performance of M&As is almost exclusively analyzed for large M&As and it is unclear whether the implications of these studies are valid also Our study is based on a representative sample that includes all Swiss M&As that took place in the period [2006][2007][2008]. Average size of these firms is just about 320 employees, whereupon only 40% of the firms have more than 100 employees. Accordingly, we are able to draw conclusions regarding the total of M&As in the respective period of time, 86% of which had less than 500 employees. Further, our study is based on survey data that provide us detailed information on the determinants of M&A performance. We investigate the firm characteristics that determine the innovation and economic performance of M&A. The performance measures come from surveybased firms' assessments. These measures are regressed on a series of possible determining factors as postulated in existing theoretical and empirical literature.Previous empirical studies that deal with the determinants of M&A performance are often based on small sample survey results. Probably most closely related to our work are the studies of Capron (1999) and Cassiman et al. (2005). However, both studies are not representative of the M&A population. Furthermore, we analyze ...

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Section: Relative Sizementioning

confidence: 95%

How Swiss small and medium-sized firms assess the performance impact of mergers and acquisitions

Arvanitis

Stucki

2013

Small Bus Econ

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“…While the results of this study largely confirm the findings of prior studies, they also call into question the findings of other studies, such as Eckbo (1986), who found that bidders in Canadian M&As earned significant positive BHAR in the long-run post-M&A period. Additionally, Loderer and Martin (1992) and Dutta and Jog (2009) present different results as they did not discover any bidder underperformance in the long-run, post-M&A period.…”

Section: Findings and Resultsmentioning

confidence: 78%

“…However, the same study revealed significant over-performance for bidders in tender offers. Dutta and Jog (2009) found neither positive nor negative cumulative average abnormal returns for 1,300 M&As in Canada during the period 1993-2002. Overall, prior studies provide mixed results about the long-run effects of M&As on shareholder performance, and as a result, this area requires further research.…”

Section: Introductionmentioning

confidence: 78%

“…On the other hand the geographical location of bidder firms appeared to have an influence on their performance. Dutta and Jog (2009) used both event time and calendar time approaches to investigate the long-term stock return performance of Canadian bidder firms using 1,300 M&As over the period [1993][1994][1995][1996][1997][1998][1999][2000][2001][2002]. Similarly this study, in contrast to the U.S studies, failed to find negative long-term abnormal stock market returns.…”

Section: Impact Of Mandas On Bidder Firms' Long Run Performancementioning

confidence: 90%

“…However, studies about the long-term effects of M&As on the shareholder returns of bidding firms suggest that the majority of M&As generate negative abnormal returns (Agrawal et al, 1992;Sudarsanam & Mahate, 2003;Loughran & Vijh, 1997, among others). This raises the question as to why firms earn negative abnormal returns in the long-run after having earned positive abnormal returns in the short run (Loderer & Martin, 1992;Dutta & Jog, 2009). Rau and Vermaelen (1998) suggest that the performance extrapolation hypothesis is one of the reasons for the negative abnormal returns in the long run.…”

Section: Reasons For Negative Long Term Performance After Mergers Andmentioning

confidence: 99%

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The Long-Run Performance of U.S. Bidding Firms in the Post M&A Period: The Impact of Bid Type, Payment Method and Industry Specialisation

Γιαννόπουλος¹,

Holt²,

Khansalar³

et al. 2017

IJBM

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This study investigates how mergers and acquisitions (M&A) affect the wealth of shareholders of public firms in the United States (U.S). More specifically, it investigates whether the nature of the bid, the payment method used, and the type of M&A have implications for shareholders of U.S bidding firms. The study analyses 352 mergers and acquisitions in the U.S during the period 1999-2008, and its results indicate that bidding firms suffer significant negative buy-and-hold abnormal returns in the three years period after a M&A announcement. The results also suggest that, in the long-run, hostile bids and cash-financed bidders outperform friendly bids and stock-funded bidders, respectively. Furthermore, the study also finds that in the long-run bidder firms that focus on industry specialisation within their M&A targets significantly outperform firms that adopt a more diversified strategy. The analysis also investigates the effects of M&A specialisation/diversification in six different sectors, and finds that specialised bidders outperform diversified bidders in four sectors: consumer & basic materials, energy & utilities, communications and technology. Furthermore, bidder firms in the financial services sector perform significantly better when diversifying into other sectors, while the performance of bidder firms in the industrial sector appears unaffected by the degree of M&A specialisation or diversification.

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