Do Takeover Targets Underperform? Evidence from Operating and Stock Returns
Financial economists seem to believe that takeovers are partly motivated by the desire to improve poorly performing firms. However, prior empirical evidence in support of this inefficient management hypothesis is rather weak. We provide a detailed re-examination of this hypothesis in a large scale e...
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| Veröffentlicht in: | Journal of financial and quantitative analysis 2003-12, Vol.38 (4), p.721-746 |
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| container_title | Journal of financial and quantitative analysis |
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| creator | Agrawal, Anup Jaffe, Jeffrey F. |
| description | Financial economists seem to believe that takeovers are partly motivated by the desire to improve poorly performing firms. However, prior empirical evidence in support of this inefficient management hypothesis is rather weak. We provide a detailed re-examination of this hypothesis in a large scale empirical study. We find little evidence that target firms were performing poorly before acquisition, using either operating or stock returns. This result holds both for the sample as a whole and for subsamples of takeovers that are more likely to be disciplinary. We conclude that the conventional view that targets perform poorly is not supported by the data. |
| doi_str_mv | 10.2307/4126741 |
| format | Article |
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| identifier | ISSN: 0022-1090 |
| ispartof | Journal of financial and quantitative analysis, 2003-12, Vol.38 (4), p.721-746 |
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| source | Jstor Complete Legacy; Business Source Complete; Cambridge Journals |
| subjects | Acquisitions & mergers Antitrust Business management Corporate mergers Economic performance Economists Empirical evidence Finance Financial economics Financial portfolios Firm theory Hypotheses Industrial regulation Investigations P values Quantitative analysis Rates of return Ratios Statistical analysis Stock prices Stock returns Studies Take-overs Target acquisitions Target company Tender offers Value Websites |
| title | Do Takeover Targets Underperform? Evidence from Operating and Stock Returns |
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