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Disentangling the Link Between Stock and Accounting Performance in Acquisitions

Author

Listed:
  • Andre Betzer

    () (University of Wuppertal)

  • Marc Goergen

    () (Cardiff Business School and European Corporate Governance Institute (ECGI))

Abstract

While empirical studies that use event-study methodology find on average that the gains from mergers and acquisitions are positive, those focusing on accounting figures tend to find a significant drop in performance. We argue that each of the four possible combinations between positive or negative abnormal stock returns and accounting performance is due to a distinct acquisition motive. We find strong empirical evidence in support of this claim.

Suggested Citation

  • Andre Betzer & Marc Goergen, 2011. "Disentangling the Link Between Stock and Accounting Performance in Acquisitions," Schumpeter Discussion Papers sdp11010, Universitätsbibliothek Wuppertal, University Library.
  • Handle: RePEc:bwu:schdps:sdp11010
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Mergers and acquisitions; performance measurement; synergies; preemption; overvaluation; corporate governance; agency problems;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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