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Disentangling the Link Between Stock and Accounting Performance in Acquisitions

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  • Andre Betzer

    ()
    (University of Wuppertal)

  • Marc Goergen

    ()
    (Cardiff Business School and European Corporate Governance Institute (ECGI))

Abstract

While empirical studies that use event-study methodology find on average that the gains from mergers and acquisitions are positive, those focusing on accounting figures tend to find a significant drop in performance. We argue that each of the four possible combinations between positive or negative abnormal stock returns and accounting performance is due to a distinct acquisition motive. We find strong empirical evidence in support of this claim.

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File URL: http://elpub.bib.uni-wuppertal.de/servlets/DerivateServlet/Derivate-1932/sdp11010.pdf
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Bibliographic Info

Paper provided by Universit├Ątsbibliothek Wuppertal, University Library in its series Schumpeter Discussion Papers with number sdp11010.

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Length: 49
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:bwu:schdps:sdp11010

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Web page: http://elpub.bib.uni-wuppertal.de

Related research

Keywords: Mergers and acquisitions; performance measurement; synergies; preemption; overvaluation; corporate governance; agency problems;

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