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- Title
The Post-Acquisition Returns of Stock Deals: Evidence of the Pervasiveness of the Asset Growth Effect.
- Authors
Mortal, Sandra; Schill, Michael J.
- Abstract
A growing literature finds that firm asset growth rates are negatively correlated with subsequent stock returns. We show that the poor post-deal returns that have been documented for stock acquisitions are more precisely explained by the return effects associated with systematically larger asset growth rates for stock deals. We find a similar result for other cross-sectional and time-series acquisition effects, including poor returns for glamour deals, weakly monitored deals, and deals done during high-valuation periods. We suggest that the distinguishing characteristic associated with poor performing acquisitions is simply their tendency to grow assets.
- Subjects
POST-acquisition integration (Mergers); STOCKS (Finance); ASSETS (Accounting); TIME series analysis; RISK management in business; FINANCIAL performance; FINANCE
- Publication
Journal of Financial & Quantitative Analysis, 2015, Vol 50, Issue 3, p477
- ISSN
0022-1090
- Publication type
Article
- DOI
10.1017/S0022109015000150