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Merger strategies and stockholder value

Merger strategies and stockholder value Acquisition literature suggests a relationship between stockholder gains and the relatedness of merging firms. This notion is tested by classifying mergers into four relatedness categories and by using measures of stockholder value as developed in the literature on capital markets. In all, stock returns of 439 acquiring firms in 1031 large mergers are examined, as are stock returns of 340 large acquired firms. The findings show that mergers lead to permanent gains in stockholder value for both acquiring and acquired firms' stockholders, but they do not support the popular prescription: ‘All things being equal, some product and market relatedness is better than none.’ http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Management Journal Wiley

Merger strategies and stockholder value

Strategic Management Journal , Volume 8 (1) – Jan 1, 1987

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Publisher
Wiley
Copyright
Copyright © 1987 John Wiley & Sons, Ltd.
ISSN
0143-2095
eISSN
1097-0266
DOI
10.1002/smj.4250080105
Publisher site
See Article on Publisher Site

Abstract

Acquisition literature suggests a relationship between stockholder gains and the relatedness of merging firms. This notion is tested by classifying mergers into four relatedness categories and by using measures of stockholder value as developed in the literature on capital markets. In all, stock returns of 439 acquiring firms in 1031 large mergers are examined, as are stock returns of 340 large acquired firms. The findings show that mergers lead to permanent gains in stockholder value for both acquiring and acquired firms' stockholders, but they do not support the popular prescription: ‘All things being equal, some product and market relatedness is better than none.’

Journal

Strategic Management JournalWiley

Published: Jan 1, 1987

References

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