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Acquirer performance when founders remain in the firm

Listed author(s):
  • Xie, Yamin
Registered author(s):

    This study explores the impact of founders on acquirers' merger performance. The results show that the acquisition of founding firms has a relatively negative impact on acquirers' performance, whereas founders who remain in a firm post-merger have a relatively positive influence. Moreover, I find significant differences between the acquirers of firms where founders remain and the acquirers of firms where founders leave. The acquirers of firms in which founders remain exhibit a higher Tobin's q and greater cumulative abnormal returns. This phenomenon is more prominent when founders remain as daily executives than when founders remain as non-daily directors. Additionally, the length of time that the founders remain with the merged firm affects the findings. Finally, I document a robust positive relationship between the remaining founders and acquirers' value or stock returns, indicating the value of founders to acquirers.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X15000207
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    Article provided by Elsevier in its journal Pacific-Basin Finance Journal.

    Volume (Year): 35 (2015)
    Issue (Month): PA ()
    Pages: 273-297

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    Handle: RePEc:eee:pacfin:v:35:y:2015:i:pa:p:273-297
    DOI: 10.1016/j.pacfin.2015.01.006
    Contact details of provider: Web page: http://www.elsevier.com/locate/pacfin

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