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Disentangling the Link Between Stock and Accounting Performance in Acquisitions

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  • 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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    Cited by:

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    2. George Marian AEVOAE, 2018. "How Can We Create Value From Enterprise Concentrations? A Meta-Analysis Of The Scientific Literature On M&As In The European Union," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 5, pages 63-87.
    3. Dasilas, Apostolos & Grose, Chris, 2018. "The wealth effects of public-to-private LBOs: Evidence from Europe," International Review of Financial Analysis, Elsevier, vol. 58(C), pages 179-194.

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    More about this item

    Keywords

    Mergers and acquisitions; performance measurement; synergies; preemption; overvaluation; corporate governance; agency problems;
    All these keywords.

    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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