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The Post-merger Performance of Acquiring Firms: A Re-examination of an Anomaly

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  • Agrawal, Anup
  • Jaffe, Jeffrey F
  • Mandelker, Gershon N

Abstract

The existing literature on the post-merger performance of acquiring firms is divided. The authors reexamine this issue, using a nearly exhaustive sample of mergers between NYSE acquirers and NYSE/AMEX targets. The authors find that stockholders of acquiring firms suffer a statistically significant loss of about 10 percent over the five-year post- merger period, a result robust to various specifications. Their evidence suggests that neither the firm size effect nor beta estimation problems are the cause of the negative post-merger returns. They examine whether this result is caused by a slow adjustment of the market to the merger event. Their results do not seem consistent with this hypothesis. Copyright 1992 by American Finance Association.

Suggested Citation

  • Agrawal, Anup & Jaffe, Jeffrey F & Mandelker, Gershon N, 1992. " The Post-merger Performance of Acquiring Firms: A Re-examination of an Anomaly," Journal of Finance, American Finance Association, vol. 47(4), pages 1605-1621, September.
  • Handle: RePEc:bla:jfinan:v:47:y:1992:i:4:p:1605-21
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