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Private public distinction of the target and the long run operating performance of acquirers

Private public distinction of the target and the long run operating performance of acquirers Purpose – The purpose of this study is to examine whether the acquirers of private targets outperform their peers that acquire public targets in the long run. Design/methodology/approach – Using two samples of acquirers of private and public targets, this paper analyses their short-run market performance and long-run operating performance. Univariate analyses and multiple regressions are used to analyse abnormal stock returns and abnormal cash flow performances of bidders. Findings – Acquirers of private targets earn significantly higher abnormal return than acquirers of public targets during the announcement period. Similarly, the long-run operating performance of acquirers of private targets is significantly higher than that of the acquirers of public targets. However, the performance difference between two groups is more pronounced when cash flows are scaled by the market value of acquirers. Originality/value – This is the first Australian study to examine whether the long-run operating performance of acquirers depends on the organisational form of the target acquired. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Pacific Accounting Review Emerald Publishing

Private public distinction of the target and the long run operating performance of acquirers

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0114-0582
DOI
10.1108/PAR-02-2014-0004
Publisher site
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Abstract

Purpose – The purpose of this study is to examine whether the acquirers of private targets outperform their peers that acquire public targets in the long run. Design/methodology/approach – Using two samples of acquirers of private and public targets, this paper analyses their short-run market performance and long-run operating performance. Univariate analyses and multiple regressions are used to analyse abnormal stock returns and abnormal cash flow performances of bidders. Findings – Acquirers of private targets earn significantly higher abnormal return than acquirers of public targets during the announcement period. Similarly, the long-run operating performance of acquirers of private targets is significantly higher than that of the acquirers of public targets. However, the performance difference between two groups is more pronounced when cash flows are scaled by the market value of acquirers. Originality/value – This is the first Australian study to examine whether the long-run operating performance of acquirers depends on the organisational form of the target acquired.

Journal

Pacific Accounting Review – Emerald Publishing

Published: Feb 1, 2016

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