IDEAS home Printed from https://ideas.repec.org/a/bla/jacrfn/v11y1999i4p88-96.html
   My bibliography  Save this article

TAKEOVERS, MANAGEMENT REPLACEMENT, AND POST‐ACQUISITION OPERATING PERFORMANCE: SOME EVIDENCE FROM THE 1980s

Author

Listed:
  • James D. Parrino
  • Robert S. Harris

Abstract

In their study of 197 U.S. takeovers from the 1980s, the authors find that the most important determinant of superior post‐merger operating performance is whether the target company's management is replaced or retained. When the target CEO is replaced, the post‐merger firm's annual cash flow returns outpace industry standards by 2 to 3%. In contrast, when target top management remains after the merger, operating returns do not exceed industry averages. The effect of management replacement is even more pronounced in those cases where the industry is consolidating. But, for those takeovers that are followed by significant investment (and thus presumably in growth industries), management replacement does not make a significant difference in post‐acquisition performance.

Suggested Citation

  • James D. Parrino & Robert S. Harris, 1999. "TAKEOVERS, MANAGEMENT REPLACEMENT, AND POST‐ACQUISITION OPERATING PERFORMANCE: SOME EVIDENCE FROM THE 1980s," Journal of Applied Corporate Finance, Morgan Stanley, vol. 11(4), pages 88-96, January.
    • Handle: RePEc:bla:jacrfn:v:11:y:1999:i:4:p:88-96
    DOI: 10.1111/j.1745-6622.1999.tb00518.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1745-6622.1999.tb00518.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1745-6622.1999.tb00518.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liou, Ru-Shiun & Rao-Nicholson, Rekha, 2017. "Out of Africa: The role of institutional distance and host-home colonial tie in South African Firms’ post-acquisition performance in developed economies," International Business Review, Elsevier, vol. 26(6), pages 1184-1195.
    2. Shams, Syed M.M. & Gunasekarage, Abeyratna, 2016. "Operating performance following corporate acquisitions: Does the organisational form of the target matter?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 12(1), pages 1-14.
    3. Shawn Bolouki & Peter Lewa, 2018. "An Exploratory Study of the Impact of Top Leadership on Effectiveness of Privatization of Hospitals Through Mergers and Acquisitions in Kenya," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 9(3), pages 54-87, August.
    4. Martynova, M. & Oosting, S. & Renneboog, L.D.R., 2006. "The Long-Term Operating Performance of European Mergers and Acquisitions," Discussion Paper 2006-111, Tilburg University, Center for Economic Research.
    5. Joze P. Damijan & Crt Kostevc & Matija Rojec, 2012. "Growing lemons and cherries? Pre- and post-acquisition performance of foreign-acquired firms in new EU member states," LICOS Discussion Papers 31812, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jacrfn:v:11:y:1999:i:4:p:88-96. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1078-1196 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.