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What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions

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  • Kathleen Fuller
  • Jeffry Netter
  • Mike Stegemoller

Abstract

We study shareholder returns for firms that acquired five or more public, private, and/or subsidiary targets within a short time period. Since the same bidder chooses different types of targets and methods of payment, any variation in returns must be due to the characteristics of the target and the bid. Results indicate bidder shareholders gain when buying a private firm or subsidiary but lose when purchasing a public firm. Further, the return is greater the larger the target and if the bidder offers stock. These results are consistent with a liquidity discount, and tax and control effects in this market.

Suggested Citation

  • Kathleen Fuller & Jeffry Netter & Mike Stegemoller, 2002. "What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions," Journal of Finance, American Finance Association, vol. 57(4), pages 1763-1793, August.
    • Handle: RePEc:bla:jfinan:v:57:y:2002:i:4:p:1763-1793
    DOI: 10.1111/1540-6261.00477
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