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Stockholder Returns Among Homogeneous Groups Of Mergers

Author

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  • Granville M. Sawyer
  • Ronald E. Shrieves

Abstract

A sample of cash and stock merger transactions consummated between 1975 and 1987 is used to form homogeneous groups based on financial characteristics of both bidding and target firms. The results are used to determine how group heterogeneity with respect to financial characteristics influences intergroup differences in both bidding firm and target firm merger returns. Stockholders of bidding firms with attributes that fit the free cash flow hypothesis of merger motivation suffer wealth losses relative to firms that have characteristics consistent with achievement of scale or scope economies or financial synergies. Differences in target and merger portfolio returns are also found.

Suggested Citation

  • Granville M. Sawyer & Ronald E. Shrieves, 1994. "Stockholder Returns Among Homogeneous Groups Of Mergers," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 17(1), pages 45-63, March.
  • Handle: RePEc:bla:jfnres:v:17:y:1994:i:1:p:45-63
    DOI: 10.1111/j.1475-6803.1994.tb00173.x
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    File URL: https://doi.org/10.1111/j.1475-6803.1994.tb00173.x
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    Cited by:

    1. Jeff Madura & Thanh Ngo, 2008. "Clustered Synergies In The Takeover Market," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 31(4), pages 333-356, December.

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