Cookies

We use cookies to ensure that we give you the best experience on our website. By continuing to browse this repository, you give consent for essential cookies to be used. You can read more about our Privacy and Cookie Policy.


Durham Research Online
You are in:

Long-run post-merger stock performance of UK acquiring firms : a stochastic dominance perspective.

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.

Abstract

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.

Item Type:Article
Additional Information:
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: del.icio.usConnoteaBibSonomyCiteULikeFacebookTwitterExport: EndNote, Zotero | BibTex
Usage statisticsLook up in GoogleScholar | Find in a UK Library