Abhyankar, A. and Ho, K. and Zhao, H. (2005) 'Long-run post-merger stock performance of UK acquiring firms : a stochastic dominance perspective.', Applied financial economics., 15 (10). pp. 679-690.
Using the idea of stochastic dominance, the long-run post-merger stock performance of UK acquiring firms is studied. Performance is compared by using the entire distribution of returns rather than only the mean as in traditional event studies. The main results are as follows: First, it is found that, in general, acquiring firms do not significantly underperform in three years after merger since no evidence of first- or second-order stochastic dominance relation between acquirer and benchmark portfolios is observed. Second, it is found that acquirers paying excessively large premiums are stochastically dominated by their benchmark portfolio implying that overpayment is a possible reason for post-merger underperformance. Consistent with previous studies, it is found that cash financed mergers outperform stock financed ones. Finally, no evidence is observed that glamour acquirers underperform value ones as no stochastic dominance relations between the two. In general, the results underline the importance of examining long-run post-merger stock performance from alternative perspectives.
|Full text:||Full text not available from this repository.|
|Publisher Web site:||http://dx.doi.org/10.1080/09603100500065305|
|Record Created:||21 Aug 2008|
|Last Modified:||08 Apr 2009 16:29|
|Social bookmarking:||Export: EndNote, Zotero | BibTex|
|Look up in GoogleScholar | Find in a UK Library|