Antoniou, A. and Petmezas, D. and Zhao, H. (2007) 'Bidder gains and losses of firms involved in many acquisitions.', Journal of business finance & accounting., 34 (7-8). pp. 1221-1244.
We examine shareholders' wealth effects (both in the short- and the long-run) of UK frequent bidders acquiring public, private, and/or subsidiary targets with alternative methods of payment between 1987 and 2004. We find that, in the short-run, bidders break even when acquiring public targets and gain significantly when buying private and subsidiary targets. This result is robust after controlling for relative size, bidder's book-to-market ratio, target origin, and industry diversification. Our long-run evidence, however, reveals that acquirers experience, significant wealth losses regardless of the target type acquired, indicating that markets may initially overreact to the acquisition announcement. As a result, we argue that contrary to Fuller et al. (2002) who suggest that acquiring private and subsidiary firms creates value for bidding firms, a reliable conclusion on bidders' shareholders wealth effects cannot be based solely on a short-run event study.
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|Publisher Web site:||http://dx.doi.org/10.1111/j.1468-5957.2007.02012.x|
|Record Created:||19 Aug 2008|
|Last Modified:||20 Aug 2010 10:28|
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