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When Do Firms Go in for Growth by Acquisitions?


  • Hay, Donald A
  • Liu, Guy S


This paper analyzes the incidence of acquisitions, and the determinants of expenditure or acquisitions, in a sample of 110 U.K. quoted companies, 1970-89. Financial variables, especially those related to M. Jensen's 'free cash flow' theory of acquisitions, are found to be significant, notably for dominant firms. But there is little support for the inclusion of market structure variables which seek to capture the strategic role of acquisitions as an instrument of competition in oligopolistic markets. Copyright 1998 by Blackwell Publishing Ltd

Suggested Citation

  • Hay, Donald A & Liu, Guy S, 1998. "When Do Firms Go in for Growth by Acquisitions?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(2), pages 143-164, May.
  • Handle: RePEc:bla:obuest:v:60:y:1998:i:2:p:143-64

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    References listed on IDEAS

    1. Gottschalk, Peter, 1996. "Is the correlation in welfare participation across generations spurious?," Journal of Public Economics, Elsevier, vol. 63(1), pages 1-25, December.
    2. Arulampalam, Wiji & Booth, Alison L & Elias, Peter, 1996. "Modeling Work-related Training and Training Effects Using Count Data Techniques," The Warwick Economics Research Paper Series (TWERPS) 448, University of Warwick, Department of Economics.
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    Cited by:

    1. Huyghebaert, Nancy & Luypaert, Mathieu, 2010. "Antecedents of growth through mergers and acquisitions: Empirical results from Belgium," Journal of Business Research, Elsevier, vol. 63(4), pages 392-403, April.
    2. Andrew P. Dickerson & Heather D. Gibson & Euclid Tsakalotos, 2003. "Is attack the best form of defence? A competing risks analysis of acquisition activity in the UK," Cambridge Journal of Economics, Oxford University Press, vol. 27(3), pages 337-357, May.
    3. Ulrich Hege, 2010. "Acquisition Values and Optimal Financial (In)Flexibility," Review of Financial Studies, Society for Financial Studies, vol. 23(7), pages 2865-2899, July.
    4. Klaus Gugler & Dennis C. Mueller & B. Burçin Yurtoglu, 2006. "The Determinants of Merger Waves," CIG Working Papers SP II 2006-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    5. Gugler, Klaus & Mueller, Dennis C. & Weichselbaumer, Michael, 2012. "The determinants of merger waves: An international perspective," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 1-15.

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