On the relation between the relative size of acquisitions and the wealth of acquiring firms

There are dozens of studies in the mergers and acquisitions literature that include the relative size of an acquisition as an additive control variable in models explaining acquisition wealth effects. A majority of these studies document a positive coefficient estimate on relative size, but many doc...

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Veröffentlicht in:Applied economics letters 2013-04, Vol.20 (6), p.534-539
Hauptverfasser: Jansen, Ivo Ph, Sanning, Lee W., Stuart, Nathan V.
Format: Artikel
Sprache:eng
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Zusammenfassung:There are dozens of studies in the mergers and acquisitions literature that include the relative size of an acquisition as an additive control variable in models explaining acquisition wealth effects. A majority of these studies document a positive coefficient estimate on relative size, but many document a negative coefficient estimate instead. Our study demonstrates that these seemingly contradictory findings stem from a misspecification of the functional form of the relation between Cumulative Abnormal Returns (CAR) and relative size.
ISSN:1350-4851
1466-4291
DOI:10.1080/13504851.2012.718056