Firm size and the gains from acquisitions

Firm size and the gains from acquisitions We examine a sample of 12,023 acquisitions by public firms from 1980 to 2001. The equally weighted abnormal announcement return is 1.1%, but acquiring-firm shareholders lose $25.2 million on average upon announcement. This disparity suggests the existence of a size effect in acquisition announcement returns. The announcement return for acquiring-firm shareholders is roughly two percentage points higher for small acquirers irrespective of the form of financing and whether the acquired firm is public or private. The size effect is robust to firm and deal characteristics, and it is not reversed over time. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

Firm size and the gains from acquisitions

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Publisher
Elsevier
Copyright
Copyright © 2004 Elsevier B.V.
ISSN
0304-405x
D.O.I.
10.1016/j.jfineco.2003.07.002
Publisher site
See Article on Publisher Site

Abstract

We examine a sample of 12,023 acquisitions by public firms from 1980 to 2001. The equally weighted abnormal announcement return is 1.1%, but acquiring-firm shareholders lose $25.2 million on average upon announcement. This disparity suggests the existence of a size effect in acquisition announcement returns. The announcement return for acquiring-firm shareholders is roughly two percentage points higher for small acquirers irrespective of the form of financing and whether the acquired firm is public or private. The size effect is robust to firm and deal characteristics, and it is not reversed over time.

Journal

Journal of Financial EconomicsElsevier

Published: Aug 1, 2004

References

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