Do Managerial Objectives Drive Bad Acquisitions?

Do Managerial Objectives Drive Bad Acquisitions? ABSTRACT In a sample of 326 US acquisitions between 1975 and 1987, three types of acquisitions have systematically lower and predominantly negative announcement period returns to bidding firms. The returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target, and when its managers performed poorly before the acquisition. These results suggest that managerial objectives may drive acquisitions that reduce bidding firms' values. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Finance Wiley

Do Managerial Objectives Drive Bad Acquisitions?

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Publisher
Wiley
Copyright
1990 The American Finance Association
ISSN
0022-1082
eISSN
1540-6261
D.O.I.
10.1111/j.1540-6261.1990.tb05079.x
Publisher site
See Article on Publisher Site

Abstract

ABSTRACT In a sample of 326 US acquisitions between 1975 and 1987, three types of acquisitions have systematically lower and predominantly negative announcement period returns to bidding firms. The returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target, and when its managers performed poorly before the acquisition. These results suggest that managerial objectives may drive acquisitions that reduce bidding firms' values.

Journal

The Journal of FinanceWiley

Published: Mar 1, 1990

References

  • Value maximization and the acquisition process
    Shleifer, Shleifer; Robert, Robert

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