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Learning from repetitive acquisitions: Evidence from the time between deals

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  • Aktas, Nihat
  • de Bodt, Eric
  • Roll, Richard
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    Abstract

    Knowledge gleaned from previous acquisitions may confer valuation expertise and other benefits. But numerous acquisitions also entail costs, due to problems of incorporating diverse units into an ever larger firm. Such benefits and costs are not directly observable from outside the firm. This article proposes a simple model to infer their relative importance, using the time between successive deals. The data requirements are minimal and allow the use of all mergers and acquisitions during 1992–2009 (more than 300,000 deals). The results provide evidence of learning gains through repetitive acquisitions, especially under CEO continuity and when successive deals are more similar.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Financial Economics.

    Volume (Year): 108 (2013)
    Issue (Month): 1 ()
    Pages: 99-117

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    Handle: RePEc:eee:jfinec:v:108:y:2013:i:1:p:99-117

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    Web page: http://www.elsevier.com/locate/inca/505576

    Related research

    Keywords: Acquisitions program; Learning; Integration costs; Time between successive deals;

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    Cited by:
    1. Francis, Bill B. & Hasan, Iftekhar & Sun, Xian, 2014. "Does relationship matter? The choice of financial advisors," Journal of Economics and Business, Elsevier, vol. 73(C), pages 22-47.
    2. Francis, Bill B. & Hasan, Iftekhar & Sun, Xian & Waisman, Maya, 2014. "Can firms learn by observing? Evidence from cross-border M&As," Journal of Corporate Finance, Elsevier, vol. 25(C), pages 202-215.
    3. Jaffe, Jeffrey & Pedersen, David & Voetmann, Torben, 2013. "Skill differences in corporate acquisitions," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 166-181.

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