Disentangling the Link Between Stock and Accounting Performance in Acquisitions

Disentangling the Link Between Stock and Accounting Performance in Acquisitions

André Betzer, Markus Doumet, Marc Goergen

Series number :

Serial Number: 
259/2009

Date posted :

January 01 2014

Last revised :

September 18 2009
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Keywords

  • mergers and acquisitions • 
  • Performance measurement • 
  • synergies • 
  • preemption • 
  • overvaluation • 
  • Corporate governance • 
  • agency problems.
We study the accounting and stock performance of 4,547 US acquisitions during 1989 and 2008. We categorise acquisitions into four types based on the four possible combinations of positive or negative abnormal stock performance and abnormal accounting performance. First, we compare the bidder, bid and target characteristics across the four types of acquisitions. We find significant differences.
Second, with the help of existing theories we explain these differences in bidder, bid and target characteristics by differences in the acquisition motives.

Authors

Real name: 
André Betzer
Real name: 
Markus Doumet