When Do Acquirers Earn Abnormal Returns?

Strategic Management Journal Strat. Mgmt. J., 23: 781794 (2002) Published online in Wiley InterScience (www.interscience.wiley.com). inside: 10.1002/smj.262 WHEN DO ACQUIRERS EARN ABNORMAL RETURNS? LAURENCE CAPRON1 * and NATHALIE PISTRE2 1 2 INSEAD, Fontainebleau, France CDC Ixis Asset Management, Paris, France In this study, we explore the conditions under which merchant banks top abnormal returns. We provide an confirmable test of Barney and Chatterjees arguments by examining the role of the respective preference contribution of the tar astound and the acquirer. Combining an event study with a survey of postacquisition resource transfer on a smack of 101 horizontal acquisitions, we ?nd that acquirers do not earn abnormal returns when they only receive resources from the target. In this case, it is likely that sevenfold bidders, which could have equally captured these resources, competed away all the abnormal returns from the undefeated bidder. In contrast, we ?nd that acquirers can expect to earn abnormal returns when they transfer their own resources to the target. Overall, we ?nd that value creation does not ensure value capture for the acquirer. Copyright ? 2002 John Wiley & Sons, Ltd.

numerous studies in strategy and ?nance have shown that acquisitions are a mixed blessing for the shareholders of acquiring ?rms, even when they create synergies. empirical evidence suggests that average returns to successful bidders are null, while the synergetic bene?ts of acquisitions usually accrue to the shareholders of targetsâ€"a return of +30 portion on average (Jensen and Ruback, 1983; Bradley, Desai and Kim, 1988). The asymmetric distribution of gains between the acquirer and the target remains a puzzle in some(prenominal) the ?nance and strategy literature. If most of the studies show that, on average, acquirer shareholders about break even, very few emphasize that this smashed hides a large variance in acquirer gains. anecdotical evidence suggests that some mergers lead to major losses... If you want to get a full essay, order it on our website: Ordercustompaper.com

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