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Serial acquirers and decreasing returns: Do bidders’ acquisition patterns matter?

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  • Thibaut G. Morillon

Abstract

This paper examines the phenomenon of declining announcement returns of serial acquirers. Using a classification of acquirers based on their patterns of acquisition, I find that decreasing returns occur mostly within “blocks” of acquisitions. This trend is driven by bidders who acquire targets quickly in chunks. In contrast, I find no evidence of any such decline in returns for the most active acquirers in the market of corporate control. I test several theories proposed by the prior literature to explain declining returns and find evidence consistent with temporary overvaluation, agency costs, and bidder learning as likely drivers.

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  • Thibaut G. Morillon, 2021. "Serial acquirers and decreasing returns: Do bidders’ acquisition patterns matter?," The Financial Review, Eastern Finance Association, vol. 56(3), pages 407-432, August.
    • Handle: RePEc:bla:finrev:v:56:y:2021:i:3:p:407-432
    DOI: 10.1111/fire.12253
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