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When do Firms go in for Growth by Acquisitions?

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  • Donald A. Hay
  • Guy S. Liu

Abstract

This paper analyses the incidence of acquisitions, and the determinants of expenditure or acquisitions, in a sample of 110 UK quoted companies, 1970–89. Financial variables, especially those related to Jensen's ‘free cash flow’ theory of acquisitions are found to be significant, notably for dominant firms. But there is little support for the inclusion of market structure variables which seek to capture the strategic role of acquisitions as an instrument of competition in oligopolistic markets.

Suggested Citation

  • Donald A. Hay & Guy S. Liu, 1998. "When do Firms go in for Growth by Acquisitions?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(2), pages 143-165, May.
    • Handle: RePEc:bla:obuest:v:60:y:1998:i:2:p:143-165
    DOI: 10.1111/1468-0084.00092
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    Cited by:

    1. Huyghebaert, Nancy & Luypaert, Mathieu, 2010. "Antecedents of growth through mergers and acquisitions: Empirical results from Belgium," Journal of Business Research, Elsevier, vol. 63(4), pages 392-403, April.
    2. Gugler, Klaus & Mueller, Dennis C. & Weichselbaumer, Michael, 2012. "The determinants of merger waves: An international perspective," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 1-15.
    3. Chidambaran, N.K. & Krishnakumar, Dipali & Sethi, Madhvi, 2018. "Cross-border vs. domestic acquisitions: Evidence from India," Journal of Economics and Business, Elsevier, vol. 95(C), pages 3-25.
    4. Ulrich Hege, 2010. "Acquisition Values and Optimal Financial (In)Flexibility," Review of Financial Studies, Society for Financial Studies, vol. 23(7), pages 2865-2899, July.
    5. Klaus Gugler & Dennis C. Mueller & B. Burçin Yurtoglu, 2006. "The Determinants of Merger Waves," CIG Working Papers SP II 2006-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).

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