Advanced Search
MyIDEAS: Login

Motives for Acquisitions in the UK

Contents:

Author Info

  • Michael McCann
Registered author(s):

    Abstract

    This paper investigates the motives for acquisitions in the UK. Standard event study methodology is inadequate to distinguish between different motives for acquisitions in any sample. Berkovitch and Narayanan (1993) propose a different methodology to distinguish between competing motives in any sample. This methodology analyses the relationship between the target gain and total gain to distinguish acquisitions driven by efficiency from those driven by agency motives. To differentiate managerial hubris from agency problems, the relationship between target gain and bidder gain is also analysed. The results show that efficiency is the primary motive for acquisitions exhibiting positive total gains. However, there is evidence of managerial hubris in the sample. In acquisitions were total gains are negative, agency problems are the primary motive.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.ntu.ac.uk/research/document_uploads/31286.pdf
    File Function: First version, 2004
    Download Restriction: no

    Bibliographic Info

    Paper provided by Nottingham Trent University, Nottingham Business School, Economics Division in its series Working Papers with number 2004/1.

    as in new window
    Length:
    Date of creation: Jan 2004
    Date of revision:
    Handle: RePEc:nbs:wpaper:2004/1

    Contact details of provider:
    Web page: http://www.ntu.ac.uk/nbs

    Related research

    Keywords: Acquisitions; event studies; efficiency; agency problems; managerial hubris.;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110.
    2. Hao Zhang, 1998. "US Evidence on Bank Takeover Motives: A Note," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(7&8), pages 1025-1032.
    3. Schwert, G.W., 1994. "Mark-up Pricing in Mergers and Acquisitions," Papers 95-01, Rochester, Business - Financial Research and Policy Studies.
    4. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    5. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351.
    6. Dodd, Peter, 1980. "Merger proposals, management discretion and stockholder wealth," Journal of Financial Economics, Elsevier, vol. 8(2), pages 105-137, June.
    7. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    8. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    9. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
    10. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
    11. Berkovitch, Elazar & Narayanan, M. P., 1993. "Motives for Takeovers: An Empirical Investigation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 28(03), pages 347-362, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:nbs:wpaper:2004/1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Simeon Coleman).

    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.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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