Motives for Acquisitions in the UK
This paper investigates the motives for acquisitions in the UK. Standard event study methodology is inadequate to distinguish between different motives for acquisitions in any sample. Berkovitch and Narayanan (1993) propose a different methodology to distinguish between competing motives in any sample. This methodology analyses the relationship between the target gain and total gain to distinguish acquisitions driven by efficiency from those driven by agency motives. To differentiate managerial hubris from agency problems, the relationship between target gain and bidder gain is also analysed. The results show that efficiency is the primary motive for acquisitions exhibiting positive total gains. However, there is evidence of managerial hubris in the sample. In acquisitions were total gains are negative, agency problems are the primary motive.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Schwert, G. William, 1996.
"Markup pricing in mergers and acquisitions,"
Journal of Financial Economics,
Elsevier, vol. 41(2), pages 153-192, June.
- Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
- Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110.
- Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
- Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Berkovitch, Elazar & Narayanan, M. P., 1993. "Motives for Takeovers: An Empirical Investigation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 28(03), pages 347-362, September.
- Hao Zhang, 1998. "US Evidence on Bank Takeover Motives: A Note," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(7&8), pages 1025-1032.
- Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
- Dodd, Peter, 1980. "Merger proposals, management discretion and stockholder wealth," Journal of Financial Economics, Elsevier, vol. 8(2), pages 105-137, June.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351.
When requesting a correction, please mention this item's handle: RePEc:nbs:wpaper:2004/1. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Simeon Coleman)
If references are entirely missing, you can add them using this form.