The (Missing) Relation Between Announcement Returns and Value Creation

Ben‐David, Itzhak; Bhattacharya, Utpal; Jacobsen, Stacey E.

doi:10.3386/w27976

Cited by 5 publications

(1 citation statement)

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“…Other researchers have also found that similarity between acquirer and target, enabling positive transfer of knowledge, results in positive acquisition performance measured through announcement time CAR (Finkelstein and Haleblian 2002;Hayward 2002). However, Ben-David et al (2020) showed that, contrary to the widely-held view of announcement returns being reflective of long-term acquisition outcomes, they are uncorrelated, casting doubt on the usefulness of announcement returns.…”

Section: Market Measuresmentioning

confidence: 96%

Post-Acquisition Performance of Emerging Market Firms: A Multi-Dimensional Analysis of Acquisitions in India

Das

2021

JRFM

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M&A performance is a multifaceted, compound construct with no overarching factor that captures all different dimensions. This paper examines the concept of acquisition performance and proposes a model that links firm-level factors and transaction parameters with firms’ short-term and long-term performance, extending to financial-, market- and innovation measures. Building on past empirical studies on the influence of various factors on M&A performance, a multi-dimensional structural equation model has been developed and it has been tested with a dataset on acquisitions in the Indian technology sector over a period of ten years. The results suggest that: (a) smaller acquirers with higher book value and leveraged firms demonstrate better long-term performance; (b) contrary to established understanding, short-term market returns are not influenced by deal parameters; (c) majority stake purchases show relatively lesser gains—suggesting the possible presence of post-acquisition integration issues and, (d) acquirers with high intangible assets continue to do well on innovation performance post-acquisition. By indicating situations and conditions under which an acquisition would potentially lead to a performance gain for the acquirer, these results provide significant insight to practitioners pursuing M&As for growth opportunities.

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Section: Market Measuresmentioning

confidence: 96%